By Jeff Cox, CNBC.com Senior Writer NEW YORK ( CNBC) -- Fed Chairman Ben Bernanke's remarks to Congress last week satisfied neither those who believe the economy can stand on its own nor those who want the central bank to continue playing a role in the markets. Stocks gained enough Thursday to make the Bernanke appearance an even draw. But behind the trading, Wall Street seemed to want to have its economic recovery cake while it eats more monetary easing, too. Bernanke delivered what historically had been known as his Humphrey Hawkins remarks to the Senate and indicated that the recent turn in data -- manufacturing, housing and employment to name three -- gave him confidence that the recovery, while uneven, was a bit better than he had anticipated.
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"In particular, the equity markets appeared to be disappointed that the signs of a stronger economic recovery -- previously regarded, of course, as a positive -- mean that Bernanke felt no need to signal another round of quantitative easing," Jessop added. "This makes one wonder whether investors would have been happier if the Fed chairman had talked down the economy and suggested that further monetary stimulus will be required." Such reaction could indicate a market not facing reality, he said. "The one lesson we would draw is that if equity investors are banking both on stronger economic growth and further monetary easing to support current valuations, they are almost certain to be disappointed," Jessop said. Traditionally, the second day of the Fed chairman's address is usually less market-moving than the first, and the major averages quietly sloshed around in positive territory Thursday. Bernanke delivered a stern warning regarding fiscal policy, but otherwise avoided much talk about future easing intentions. That stood in contrast to Wednesday's stock losses as well as a $75 drop in gold prices, a move that could be seen as a decrease in the inflation expectations that would come with a third round of quantitative easing . "The response yesterday was breathtaking in its swiftness and violence and we are convinced that the response by gold and other markets was and is egregiously ill-advised and massively overdone," hedge fund manager Dennis Gartman said in his daily newsletter. "The Fed is not going to take away its punchbowl...but it appears that it will not be pouring anything into that same punchbowl for a while." The other side of the argument, of course, is that the Fed moving away from its historic market intervention would be a sign of confidence. Since the financial crisis began, the Fed has staged two QE bond-buying interventions as well as a third program called Operation Twist, which caused no net expansion of the central bank's $2.9 trillion balance sheet but did result in bond yields dropping even further. "The Fed needs to get out of its crisis mindset," said Jim Paulsen, chief market strategist at Wells Capital Management in Minneapolis. "Would we really be focused on Greece if there was a legitimate crisis here to worry about?" Instead, Paulsen said the Fed needs to start worrying more about the inflation its policies could cause. Rising bond yields later in the year actually could force the central bank to increase rates rather than go to even more accommodative policy, he said. "I'm an advocate of the Fed starting to normalize its monetary policy with the economic cycle that's matured from crisis to recovery," Paulsen said. "You can still accommodate, but there's no reason to accommodate it with crisis policies any longer." --Written by Jeff Cox at CNBC