Stocks Dip After Disappointing Manufacturing Data

CHRISTINA REXRODE

NEW YORK (AP) ⿿ The stock market keeps getting tossed around by the Fed.

Stocks opened lower Friday but turned around after a letter surfaced from Federal Reserve Chairman Ben Bernanke suggesting there was room for the central bank to do more to help the economy.

"There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery," Bernanke wrote to California Rep. Darrell Issa, a Republican, in a letter obtained by The Wall Street Journal.

The Dow Jones industrial average was down 30 points at its low but was up 67 at 13,124 just after 12:30 p.m. EDT. The Standard & Poor's 500 index was up six to 1,408. The Nasdaq composite index rose 13 to 3,066.

In a typically slow August week, investors have hung on hints from the Fed.

On Wednesday afternoon, investors pushed stocks higher after the Fed released meeting minutes that appeared to signal it was ready to take more action to prop up the economy.

On Thursday, stocks declined when a Fed regional bank president cast doubt on the idea, saying in an interview with CNBC that the economic recovery appeared to be gaining strength.

Then on Friday, Bernanke shook up the market again. Issa is head of the House oversight committee and had asked the Fed chairman whether it was premature to consider additional steps.

The Fed has several options, including buying bonds, as it has done twice since the 2008 financial crisis, to lower interest rates and drive investors into the stock market.

For the most part, the market has been hard to read this month. Without much news, trading volume has been low, and investors haven't had much conviction either way about the economy.

Of 17 trading days in August, only once has the Dow moved more than 1 percent. On many days, it has been virtually flat, moving less than one-tenth of a percentage point.

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