Updated from 4:23 p.m. EDT
Stocks in the U.S. rallied Friday after Federal Reserve Chairman Ben Bernanke addressed the current subprime mess and President Bush moved to offer federal help to mortgage borrowers.
The Dow Jones Industrial Average jumped 119.01 points, or 0.9%, to 13,357.74, led by a 3.4% jump in shares of Home Depot (HD - Get Report). The S&P 500 added 16.35 points, or 1.12%, at 1473.99, and the Nasdaq Composite rose 31.06 points, or 1.21%, to 2596.36.
While the major averages finished the week nearly unchanged, the market logged its first winning month since May. The Dow added 1.1% in August, the S&P 500 climbed 1.2%, and the Nasdaq jumped 2%.The gains came after a speech from Bernanke on housing and monetary policy in Jackson Hole, Wyo., and remarks from President Bush encouraging the use of Federal Housing Administration insurance. In his speech, Bush noted that the subprime crisis is relatively modest compared with the entire U.S. economy, but he urged mortgage holders to refinance and count on the FHA if they become delinquent on adjustable-rate loans. The president, however, emphasized that it is not the government's position to provide a wholesale bailout to all borrowers. He also promised to penalize predatory lenders. "That's not really the answer to the subprime issue that's out there," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "Too many people have bought homes that they can't afford. It's hard to protect people from themselves forever. There's a strong reaction to this proposal, but this isn't the answer."