NEW YORK, Feb. 27 (Xinhua) -- The U.S. stocks continued to rally on Wednesday, boosted by Federal Reserve Chairman Ben Bernanke's defense of the central bank's quantitative easing policy before Congress and better-than-expected pending home sales, although the so-called sequester nears.
The Dow Jones Industrial Average climbed 175.24 points, or 1.26 percent, to 14,075.37. The Standard & Poor's 500-stock Index surged 19.05 points, or 1.27 percent, to 1,515.99. The Nasdaq Composite Index rose 32.61 points, or 1.04 percent, to 3,162.26.
At Wednesday's close, the Dow and S&P 500 were just 0.63 percent and 3.14 percent below their historical highs set in October 2007, respectively.
Bernanke reaffirmed on Wednesday in his Capitol Hill testimony that the Fed's massive bond-purchasing programs were needed to boost a still-weak economy, and have helped create jobs for average Americans.
The equity market has benefited a lot from the ultra-low interest rates that the Fed has maintained to spur the sluggish economy and improve hiring since the onset of the financial crisis.
The market was also bolstered on Wednesday by strong U.S. pending home sales. The forward-looking indicator based on contract signings increased 4.5 percent to 105.9 in January, the highest level since April 2010, according to the National Association of Realtors (NAR).
"Favorable affordability conditions and job growth have unleashed a pent-up demand," said Lawrence Yun, NAR chief economist, adding that inventory was the key to this year's housing market.
New orders for U.S.-manufactured durable goods in January decreased 5.2 percent, following four consecutive months of increase,the Commerce Department reported on Wednesday. However, excluding transportation, a volatile item, new orders increased 1. 9 percent.
The market was also underpinned by rising European stocks, as the European Commission said on Wednesday that the February Economic Sentiment Indicator (ESI) in the euro area rose 1.6 points to 91.1, up for the fourth straight month.
Global equity markets also recovered somewhat on Wednesday as investors' worries about Italian political uncertainties in the wake of the country's parliament election eased.
The CBOE Volatility Index, broadly considered a gauge of fear in the market, dipped for a second straight day, down 12.7 percent to close at 14.73 on Wednesday.
In corporate news, shares of Target dropped 1.45 percent to 63. 12 U.S. dollars as the retail chain's earnings in its fiscal fourth quarter fell from the year-ago period.
Priceline shares rallied 2.57 percent to 695.91 dollars after the online travel agency beat market estimates on its fourth- quarter profit.
J.C. Penney shares plunged in after-hours trading as the department store reported massive losses for its fiscal fourth quarter after the closing bell.
The market was also keeping an eye on how U.S. President Barack Obama and congressional leaders would discuss the automatic federal spending cuts totaling 85 billion dollars, set to kick in from March 1.
The U.S. dollar weakened against most major currencies on Wednesday. It slipped versus the euro as data showed that eurozone business sentiment continued to improve and concerns over Italy's election eased.
Light, sweet crude for April delivery gained 13 cents, or 0.14 percent, to settle at 92.76 dollars a barrel on the New York Mercantile Exchange on Wednesday.
However, Brent crude for April delivery fell 84 cents, or 0.75 percent, to close at 111.87 dollars a barrel.
Gold future for April delivery on the COMEX division of the New York Mercantile Exchange on Wednesday lost 19.8 dollars, or 1.23 percent, to settle at 1,595.7 dollars per ounce.