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Stocks rise for second straight day

August 23, 2011 |  7:51 am

Trader richard drew ap

Stock prices surged again despite data showing that home sales in the U.S. continue to fall, as hope grew in advance of a Federal Reserve meeting this week.

In early trading the Dow Jones industrial average rose 117.77 points, or 1.1%, to 10,972.42. The broader Standard & Poor's 500 index was up even more sharply.

Investors appeared to be drawing optimism from a gathering of Fed officials on Friday at which a new economic-stimulus program could be unveiled.

In addition, the Federal Deposit Insurance Corp. released a report Tuesday morning indicating that its list of troubled banks shrank for the first time since 2006.

In recent weeks investors have worried about the continuing vulnerability of U.S. banks; the report said banks were healthier now than they were before the financial crisis.

One bank that saw its shares rising Tuesday morning was Goldman Sachs, which was hit Monday afternoon with the news that its chief executive, Lloyd Blankfein, had hired a criminal defense attorney. Investors appeared to rethink their initial panicked response to the report, which sent the stock down nearly 5% in 15 minutes. Tuesday morning the bank's stock was recently up 0.5%, more than other Wall Street banks. 

The report on housing showed that sales of new homes fell for a fourth straight month in July.


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-- Nathaniel Popper

Photo: Richard Drew / Associated Press