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U.S. stocks rise after Bernanke speech; Wall Street awaits news on borrowers from Bush

U.S. stocks rise after Bernanke speech; Wall Street awaits news on borrowers from Bush

Wall Street resumed its advance Friday after briefly balking when comments from Federal Reserve Chairman Ben Bernanke did not indicate that a cut in the benchmark federal funds rate was imminent. Investors seemed to take comfort from comments that the Fed will step in if needed.
Bernanke, speaking at a Fed meeting in Jackson Hole, Wyoming, said the central bank will "act as needed" to prevent the credit crisis from hurting the national economy, according to prepared remarks.
The major indexes, up sharply on optimism about a rate cut before Bernanke's speech, pulled back but climed again ahead of an expected announcement by President George W. Bush of a plan to help borrowers facing trouble paying their mortgages.
Since the stock market started tumbling in late July on fears that problems in mortgage and corporate lending would lead to a credit freeze and hurt the economy, the Fed has injected tens of billions of dollars into the banking system and lowered its discount rate _ the charge on its loans to commercial banks. But the Fed has not yet said it will lower the benchmark federal funds rate, and Wall Street's uncertainty over what the central bank will do next has kept the markets volatile. The Fed's next meeting is Sept. 18 and some investors had expected the central bank might hint at or even go through with a rate cut before then.
The Dow Jones industrial average rose 107.63, or 0.81 percent, to 13,346.36.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 14.72, or 1.01 percent, to 1,472.36, and the Nasdaq composite index rose 25.10, or 0.98 percent, to 2,590.40.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.54 percent from 4.51 percent late Thursday. Bond prices move opposite their yields.
Economic news, as Bernanke indicated Friday, appeared less relevant than normal Friday as investors remained focused on upheaval in the credit market and mortgage concerns.
The Commerce Department reported on personal income and spending and the core personal consumption expenditures deflator, one of the Fed's preferred gauges of inflation. Personal incomes and spending edged up by 0.5 percent and 0.3 percent, respectively, and year-over-year core PCE stayed at 1.9 percent _ within the Fed's comfort range.
The Commerce Department also said orders to factories jumped by 3.7 percent in July, even better than the 3.3 percent increase that had been expected. The increase, which followed three months of modest gains, followed an 11 percent jump in demand for transportation goods, including the biggest increase in orders for cars in more than four years.
Also, the Chicago purchasing manager's index, rose to 53.8 in August from 53.4 in July.
Mortgage lenders also got a boost from Bush's plans. His speech is to cover several initiatives and reforms to help homeowners with risky mortgages keep their homes, a senior administration official said Thursday. The official said Bush will direct Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to work on an initiative to help troubled mortgage holders get services and products they need to keep them from defaulting on their loans.
Countrywide rose 36 cents to $20, while Impac Mortgage Holdings Inc. rose 5 cents, or 3 percent, to $1.70. Homebuilders also gained. Beazer Homes USA Inc. rose 84 cents, or 8.5 percent, to $10.74, while KB Home rose $1.10, or 3.8 percent, to $30.31.
In other corporate news, Dell Inc. reported after the market closed Thursday that its second-quarter profit soared 46 percent. The computer maker rose 2 cents to $28.48.
Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where volume came to a light 285.3 million shares. Trading in late August often is light as investors take end-of-summer vacations.
The Russell 2000 index of smaller companies rose 6.00, or 0.77 percent, to 789.11.


Updated : 2021-03-07 08:18 GMT+08:00