It took a while, but investors eventually decided they liked what they heard from Ben Bernanke, and stock indexes rose enough on Friday to put them into positive territory for August.
Stocks gyrated after the Federal Reserve chairman spoke on Friday morning. They first gave up their morning gains, then bolted to their highs for the day, before settled in-between.
The Dow Jones industrial average ended the day up 90.13 points at 13,090.84.
A half-hour after trading began, Bernanke declared that the Fed is ready to take more action to help an economy that’s “far from satisfactory.”
Investors have been watching to see whether the Fed will buy more bonds to further lower long-term interest rates. Stocks fell initially, however, after it became clear that no such announcement was coming Friday and that Bernanke had stopped short of committing the Fed to any specific move.
Still, he said the Fed “should not rule out” new policies to improve the job market.
Stocks rebounded once investors parsed his comments. At one point the Dow was up as many as 151 points.
In terms of volatility, “it’s been the most action we’ve seen in couple of weeks,” said a senior equity trader. He noted that pre-Labor Day volume was light, with many investors and traders on vacation, which can contribute to bigger price swings.
The Standard & Poor’s 500 index closed up by 7.10 points at 1,406.58. The Nasdaq rose 18.25 points to close at 3,066.96.
The Dow finished the month of August up by 0.8 percent. The S&P 500 rose more than 2 percent for the month, and the Nasdaq rose more than 4 percent.
ANALYSTS QUOTES
"The market drew a lift today on further confirmation that [Fed Chairman Ben] Bernanke does have another round of QE in his back pocket.”
“It certainly seems he’s making an impassioned case for the ethicality of further monetary easing. If he believes it, and the board believes it, and they continue to see the dire need for it, we’re probably going to get something."
"There was no announcement about if more stimulus was coming immediately, but he (Bernanke) said the Fed was ready to act if necessary so that was supportive."
“The true test of the market advance will come when more investors come back in September. Volume has been anemic."
“Stocks have mostly priced in odds of QE3 taking place along with substantial policy actions out of the Europeans, with what’s going on with gold and silver being up today on weakness in the dollar that’s clearly associated with Bernanke’s coming likely actions,”
"Along with the factory orders and consumer sentiment data, the (market) longs are in control."
HAPPY TRADING
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