This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bernanke Burns the Bulls

As the rest of the world reveled Monday in the rites of spring, the U.S. markets herked and jerked, weighing the Fed's commitment to vigilance on the back of more strong economic data -- and some backtracking by Ben Bernanke.

The dollar and U.S. Treasury bonds sold off through most of the day, while U.S. stocks and commodities began a spin up the maypole. But stocks turned violently lower on the words of CNBC's Maria Bartiromo, who said Bernanke, the Fed chairman, mentioned to her this weekend that he's unhappy with his growing reputation as a "dove."

The CNBC personality reported that the Fed chief said markets were "wrong" to react to his congressional testimony last Thursday as necessarily telegraphing a pause in June. She reported that Bernanke said it is "worrisome" that people don't see him as an "aggressive inflation fighter," and claimed that his comments had been designed to create flexibility -- not cement faith in the one-and-done scenario.

"I think the market is getting used to Mr. Bernanke in his new role," said Jack Malvey, chief global fixed-income strategist at Lehman Brothers.

The remarks, supported by subsequent comments by Chicago Fed President Michael Moskow, called back into question whether or not the Fed will take a breather after raising the fed funds rate in May 10, or hike again to 5.25%.

Indeed, the odds that the Fed will hike again in June jumped to about 42%, from 24% Friday, after the Bernanke headlines, according to Miller Tabak. The Dow Jones Industrial Average closed down 24 points, or 0.2%, at 11,343, while the S&P 500 fell 5 points, to 1305, and the Nasdaq Composite, which had struggled throughout the day dropped 18 points to 2304.

Bernanke might have had good reason to jump back into the fray. Signs that risk appetite is abating or that the economy is slowing are almost nonexistent, so the Fed's insistence that its policy is working or that inflation is "contained" is sounding stale. Most indicators are surpassing expectations, and predictions that the germs of a housing market slowdown would curb the U.S. consumer have been dashed at almost every juncture.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AVL $0.00 0.00%
BA $108.63 0.00%
LVLT $46.66 0.00%
WMT $66.18 0.00%
AAPL $93.99 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs