US stocks gained on Wednesday on news that the government will let the two biggest US home loan finance companies invest more money in the weak housing market in a move that could help revive the economy.
Shares of banks, home builders and financial services companies rallied after the federal regulator of Fannie Mae and Freddie Mac agreed to lift investment caps - a decision that will let the mortgage finance companies pump billions of dollars into the battered US housing market. Shares of Fannie Mae and Freddie Mac jumped more than 4 percent and a Standard & Poor's index of financial stocks climbed 1.3 percent.
The Dow Jones US Home Construction Index, which includes the stocks of Centex, Toll Brothers and other home builders, shot up 2.7 percent. The Dow Jones industrial average was up 49.66 points, or 0.39 percent, at 12,734.58 The Standard & Poor's 500 Index was up 5.77 points, or 0.42 percent, at 1,387.06. The Nasdaq Composite Index was up 16.86 points, or 0.72 percent, at 2,361.85. Citigroup Inc was among the S&P 500's leading advancers, gaining 3.3 percent to $25.78.
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