Stocks rise on Bernanke endorsement of renewed stimulus
NEW YORK — Ben Bernanke’s much-awaited endorsement of more Federal Reserve stimulus Friday gave stocks a solid boost, though tempered by his picture of an economy that remains weak and vulnerable.
The Dow Jones Industrial Average added 90.13 points (0.69 percent), closing at 13,090.84.
The broad-based S&P 500 rose 7.10 (0.51 percent) to 1,406.58, while the tech-rich Nasdaq climbed 18.25 (0.60 percent) to 3,066.96.
In his speech at a central bankers summit in Jackson Hole, Wyoming, Fed Chairman Bernanke warned that stagnation in the US labor market was “a grave concern” and signaled he would be pushing for more help for the sluggish economy when the Fed’s policy board meets in 12 days.
“Chairman Bernanke’s comments should be taken positively as he indicated a willingness to increase support to the economy,” said Michael James, an analyst at Wedbush Morgan Securities.
James said that a third round of Fed quantitative easing, dubbed QE3, was “more likely than unlikely, based on my reading of his commentary today, and that will continue to be positive for market sentiment next week.”
On the economic front, factory orders jumped 2.8 percent in July, the best gain in a year, the Commerce Department said.
Rumors swirled that Japan’s Sharp had fallen behind on production of screens for Apple’s latest iPhone, expected to be launched in September. Apple rose 0.2 percent.
“The delay in Sharp’s delivery raises questions about whether Apple can secure enough iPhone screens to meet the strong demand expected for the new model,” said 24/7WallSt.com analysts.
Ahead of a long holiday weekend, there was little company news. All US markets are closed Monday for Labor Day.
Government services contractor SAIC jumped 3.4 percent after reporting second-quarter revenue that topped estimates and announcing it would split into two publicly traded companies.
Bonds rallied. The yield on the 10-year Treasury fell to 1.56 percent from 1.62 percent Thursday, while the 30-year yield dropped to 2.68 percent from 2.74 percent. Bond yields move inversely to prices.
Photo via AFP