Wall Street climbs in volatile trade after Bernanke
NEW YORK (Reuters) - Stocks rose on Friday after Federal Reserve Chairman Ben Bernanke said the central bank stood ready to act to bolster the economy, although he stopped short of giving a clear signal of additional monetary easing.
Trading was initially volatile after Bernanke's comments, with equities briefly cutting gains, as investors appeared initially disappointed that he proposed no aggressive measures to boost sluggish growth.
But his stress on the struggling labor market helped stocks reverse course and climb.
"The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years," Bernanke said.
Stocks had rallied in recent weeks on growing expectations for stimulus measures from the Fed and European Central Bank before stalling this week as investors awaited a signal from the Fed Chairman.
"They got what they wanted to hear. With that in mind, there is a lot of pent-up money, waiting, waiting and waiting," said Doreen Mogavero, CEO of Mogavero, Lee & Co. in New York.
Indexes moved higher as Bernanke left the door open for more action. He spoke at the Kansas City Fed's annual Jackson Hole, Wyoming, symposium. The Fed's next policy meeting is in mid-September, and many analysts are looking to that for the final word on QE3.
"Bernanke is "not more dovish than he has been before, but still dove-ish without question," said Erik Davidson, Deputy Chief Investment Officer at Wells Fargo Private Bank in San Francisco
"There should be no doubt in anybody's mind that he is fully committed to doing what is necessary from a monetary standpoint to keep us out of recession."
The Dow Jones industrial average gained 128.20 points, or 0.99 percent, to 13,128.91. The Standard & Poor's 500 Index rose 11.28 points, or 0.81 percent, to 1,410.76. The Nasdaq Composite Index climbed 23.04 points, or 0.76 percent, to 3,071.75.
The S&P 500 was on pace for its biggest daily percentage gain since August 3 and third straight monthly advance.
Recent data has also indicated the economy continues to grow. On Friday, consumer sentiment climbed more than expected to a three-month high, while the Institute for Supply Management-Chicago's index of Midwest business activity fell in August to 53.0 from 53.7 in July.
For the week, the Dow is down 0.3 percent, the S&P is off 0.07 percent and the Nasdaq is up 0.02 percent.
Trading has been thin lately, with this week's first four days so far being among the five lowest in terms of volume this year.
Investors are also looking ahead to a meeting of the European Central Bank on Thursday that is expected to take pressure off highly indebted countries. Comments from European Central Bank Executive Board member Benoit Coeure rekindled expectations for central bank action.
SAIC Inc was the best performer on the benchmark S&P index, up 5.4 percent to $12.45 after the computer contractor reported a drop in second-quarter profit and said it would split its business into two independent public companies.
(Additional reporting by Rodrigo Campos, editing by Dave Zimmerman)