Fed Takes Bow, Tech Stocks Take Another Hit

Federal Reserve Chairman Ben Bernanke and his staff increasingly look like master forecasters ... or lucky ducks. In other words, they look exactly the opposite of investors who recently got excited about technology stocks, which on Thursday sustained a second straight day of harsh declines.

Be they lucky or good, the Fed has the markets right where it wants 'em. And "I don't think they'll surrender that any time soon," says Drew Matus, senior economist at Lehman Brothers.

A storm of bullish economic data came out Thursday as Bernanke took the floor at a Senate Budget Committee hearing. The Fed chairman warned that avoiding fixing the budget to adjust for increasing Medicare and Social Security needs could be harmful to the economy. But he revealed little about the current state of the economy or monetary policy.

He didn't have to. Good news on the housing, labor and inflation fronts Thursday further pushed the notion of a U.S. recession well into the past. The Fed is on hold and data-dependent. The economy is fine, but inflation is under control -- just what Bernanke said would happen. And, the markets no longer expect anything but that status quo from the Fed.

"Bernanke is doing a good job, and his transition has been very smooth," says Mickey Levy, chief economist at Bank of America.