Stocks Rise After Bernanke Sees 'Scope for Further Action'
NEW YORK (TheStreet) -- The major U.S. equity averages rose Friday on news of comments from Federal Reserve Chairman Ben Bernanke showing his support for additional stimulus for the economy.
In addition, Reuters reported the European Central Bank is mulling setting yield-band targets for a new bond-buying program in an effort to protect its strategy and prevent speculators from trying to cash in.
The Dow Jones Industrial Average gained 101 points, or 0.8%, at 13,158. The blue-chip index, which began the day up 6.9% so far in 2012, was mired in a four-day losing streak. The index closed the week down 0.9%.
In response to questions from U.S. Rep. Darrell Issa (R., Calif.), Bernanke revealed his view that there "is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery" in an Aug. 22 letter to the congressman.Bernanke also said the central bank's "Operation Twist" program is still "working its way through the economic system" and indicated the benefits of further action must be balanced against the costs. Breadth was positive within the Dow, with winners outpacing losers 26 to 4. The biggest percentage gainers were American Express (AXP), Kraft Foods (KFT) and Verizon (VZ). The blue-chip decliners were Caterpillar (CAT), Hewlett-Packard (HPQ) and Intel (INTC). The S&P 500 closed up 9 points, or 0.7%, at 1,411. The index finished the week down 0.5%. The Nasdaq gained 16 points, or 0.54%, at 3070. The exchange lost 0.22% for the week. The strongest sectors in the broad market were health care, consumer non-cyclicals and conglomerates. Basic materials were under pressure. Once again, volume was very light, with 2.56 billion shares changing hands on the Big Board and 1.33 billion shares in play on the Nasdaq. Stocks were in the red earlier in the day, driven lower by weaker-than-expected durable goods data and resurgent eurozone concerns. Before the open, the Census Bureau said durable goods orders rose 4.2% in July, the third consecutive monthly increase. But excluding transportation, new orders decreased 0.4%. Economists on average expected durable goods to increase 2.4% in July with the core figure seen rising 0.5%.
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