Market turns up after Bernanke, led by defensives

NEW YORK (Reuters) - Stocks rose in volatile trade on Tuesday, led largely by sectors that perform well in a struggling economy, as comments from Federal Reserve Chairman Ben Bernanke underscored that growth remains weak.

Frustration about Bernanke's lack of specifics about stimulus measures in testimony before a Senate committee drove equities lower early in the trading session.

But the Fed chief's gloomy view on the economy, especially on the jobs market, suggested the central bank was leaving the door open for further monetary stimulus.

"If the economy is weakening it means (Bernanke) will probably come back to the table. He hasn't spent that bullet yet and until he does, the markets are probably going to hold up," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.

"From a technical side we see improvement in the trend in the market but the leadership remains with defensive sectors, which tells us there's not a lot of appetite for risk."

In the last month, most gains on the S&P have come from the telecom services, consumer staples and health care sectors, which are considered defensive, safer plays. Industrials, technology and materials have posted losses in that period.

The Dow Jones industrial average <.DJI> rose 58.16 points, or 0.46 percent, to 12,785.37. The S&P 500 Index <.SPX> gained 6.19 points, or 0.46 percent, to 1,359.83. The Nasdaq Composite <.IXIC> added 8.69 points, or 0.30 percent, to 2,905.63.

The basic materials sector led gains on the S&P 500 on Tuesday with a 4 percent jump in shares of Mosaic after it reported better-than-expected quarterly results.

The S&P has posted losses in seven of the last nine sessions, falling about 1 percent. The market's relative resilience amid a worsening economic picture has been credited in part to historic low bond yields and to a vigilant Fed.

Goldman Sachs shares rose above $100 after reporting earnings that beat expectations, but was up 1.1 percent at $98.80. Coca-Cola Co , which also topped consensus forecasts, gave up a near 3 percent advance to rise 1.7 percent to $77.81.

Shares of State Street Corp fell 5.3 percent to $41.80 after the company said second-quarter net income fell.

Johnson & Johnson cut its full-year profit forecast. Shares traded lower in the morning but later turned up 0.7 percent at $68.94.

Bullish excitement around Yahoo Inc's new CEO Marissa Mayer, formerly a top executive at Google , faded and Yahoo shares slipped 0.3 percent at $15.60 after a 2 percent rise. Yahoo has cycled through three CEOs in a year.

(Reporting by Rodrigo Campos, editing by Kenneth Barry)

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