Stocks Higher, but Volatile, After Bernanke Speaks

By Joshua Freed

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 Ryan Larson, a senior equity trader at RBC Global Asset Management. 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.

Investors looking for help from the Federal Reserve may only have one more chance before the election, said Frank Fantozzi, CEO of Planned Financial Services in Cleveland. The Fed's policy-making arm meets on Sept. 13. If it doesn't announce some form of stimulus then, it probably won't until after the election, he said.

"He's waiting until the last possible minute," Fantozzi said of Bernanke. "I think in the next two weeks they're going to really digest the economic data and say, 'Ok, do we get involved or not?'"

Bernanke's said at a Fed meeting in Jackson Hole, Wyo., that it's "probably not a coincidence" that stock prices have risen since March 2009, when the Fed first announced its plan to buy Treasuries and other securities. The Dow is up 77 percent since the 2009 announcement.

Bernanke's comments on Friday got more uniform reception in energy markets, which tend to rise on bullish signs for the economy. Oil prices jumped $1.81 to $96.43 per barrel on the New York Mercantile Exchange. Natural gas and heating oil both rose more than 1 percent.

Stocks rose in nine out of 10 industry groups in the S&P 500. Energy stocks and materials stocks had the biggest gains, each up 1 percent. Utility stocks declined slightly.

Also Friday, the Commerce Department said factory orders rose 2.8 percent in July on surging demand for autos and commercial planes. However, orders for core capital goods - a key measure of investment spending - dropped 4 percent. That was that figure's fourth decline in five months.

Investors seemed more focused on Bernanke's comments and the overall higher factory orders, though.

Other shares with big moves on Friday included:

-Facebook (FB) set a new low. Downgrades by analysts pushed it down $1.03, or 5.4 percent, to $18.06. Its previous intraday low was $18.75. Facebook is down 52 percent from its $38 initial public offering price.

- US Airways Group Inc. (LCC), up 2.5 percent after disclosing that it signed a confidentiality agreement that signals the beginning of talks with American Airlines (AMR) for a possible merger.

- Zumiez (ZUMZ) fell 9.4 percent after the specialty sports and clothing retailer said its third-quarter earnings would be lower than analysts had expected.

- Science Applications International Corp. (SAI) rose 3.4 percent after saying it will split at the end of next year into two businesses, with one focusing on national security, engineering and health customers, and another focused on government customers.

Stocks in Europe were mixed. The German DAX and the CAC 40 in France both rose about 1 percent. The FTSE 100 in Britain fell 0.1 percent.

The dollar fell, with the euro rising to $1.258, and the Japanese Yen rising against the dollar to 78.33.


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paladinlvs

Empty Chair. Invisible Man. 23 million unemployeds/under employeds. First Beer Brewery installed In The White House.

September 02 2012 at 3:50 PM Report abuse -1 rate up rate down Reply
paladinlvs

Empty Chair. Invisible Man. 23 million unemployeds/under employeds. First Beer Brewery installed In The White House.

September 02 2012 at 3:50 PM Report abuse rate up rate down Reply
Setanta

ohmyboehnertwo
RONALD REAGAN ALREADY LET ILLEGALS BREAK INTO AMERICA TO STEAL AMERICAN JOBS WHEN HE GAVE THEM AMNESTY.
1 hour agoReport abusePermalink

September 02 2012 at 1:16 PM Report abuse -3 rate up rate down Reply
1 reply to Setanta's comment
Setanta

no_boner's crying about rayguNS amnesty and won't tell what POLITIKAL GROUP BLOCKED/BLOCKS enforcement of all EXISTING FEDERAL LAWS and ALLOWS and ENDORSES la raza /lulac etc. to participate IN OUR SYSTEM OF LAWS as WHAT THEY WANT and GET IS UNCONSTITUTIONAL-
EVERY SINGLE SUPPORTER and ENFORCER OF SANCTUARY CITIES/STATES should be arrested on charges of treason as THEY ALL SWORE TO UPHOLD THE CONSTITUTION OF THE UNITED STATES OF AMERICA--all this hisssspandering,sha'ria,and SOCIALIST CRAP--vote them OUT--and NEVER FORGET THAT defense authoriztion ACT either--

September 02 2012 at 1:24 PM Report abuse -4 rate up rate down Reply
mine

Bernanke speaks it's time to run and hide.

September 02 2012 at 11:06 AM Report abuse -1 rate up rate down Reply
kmdiamondcutter

ypu ******** in censorship need to die.

September 01 2012 at 5:33 PM Report abuse +2 rate up rate down Reply
kmdiamondcutter

where is the truth about apple losing in court to samsung? truth ignored, for apple payola. post it or else ********, stockholder fraud is totally out of control in our gov.

September 01 2012 at 5:33 PM Report abuse rate up rate down Reply
kmdiamondcutter

where is the truth about apple losing in court to samsung? truth ignored, for apple payola. post it or else ********, stockholder fraud is totally out of control in our gov.

September 01 2012 at 5:32 PM Report abuse rate up rate down Reply
kmdiamondcutter

where is the truth about apple losing in court to samsung? truth ignored, for apple payola. post it or else ********, stockholder fraud is totally out of control in our gov.

September 01 2012 at 5:32 PM Report abuse rate up rate down Reply
kmdiamondcutter

where is the truth about apple losing in court to samsung? truth ignored, for apple payola. post it or else ********

September 01 2012 at 5:32 PM Report abuse rate up rate down Reply
kmdiamondcutter

where is the truth about apple losing in court to samsung? truth ignored, for apple payola. post it or else ********

September 01 2012 at 5:32 PM Report abuse rate up rate down Reply