What a Week: Bulls Well-Fed

Call him "the Bull Whisperer."

"Gentle" Ben Bernanke, the chairman of the Federal Reserve, coaxed the bulls forward in both the stock market and the bond market this week with his testimony on Capitol Hill. In his soft but direct style, which draws a sharp contrast to the cryptic gravitas of his predecessor, Alan Greenspan, the bearded central banker laid out his case for a smooth landing for the U.S. economy.

The markets responded with enthusiasm. Stocks finished the week higher, with the Dow Jones Industrial Average gaining 187 points, or 1.5%, for the week. The Nasdaq added 36 points, or 1.5%, and the S&P 500 rose 17 points, or 1.2%.

Bonds took Bernanke's words less optimistically, rising on the belief that a rate cut could be in the cards if the economy slows too much. The 10-year Treasury rallied in price to yield 4.69%, compared with 4.81% on Tuesday before Bernanke's speech.

After an economic takeoff engineered under Greenspan's watch, Bernanke has been left manning the landing gear and walking a tightrope between letting things get too hot (inflation) or too cold (recession).

So far, so good. With the Dow hitting new all-time highs and the S&P approaching a record of its own, Bernanke painted a picture of a slower-growing economy with moderating inflation that is managing the burdens of heavy debt-loads and the pain of a housing slowdown with strong employment and wage growth.

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