Wall Street closed out another erratic week with a big gain Friday after investors took comments from President George W. Bush and Federal Reserve Chairman Ben Bernanke as reassuring signs Wall Street won't be left to deal with problems in the mortgage and credit markets on its own.
Investors balked early in Friday's session when comments from Bernanke didn't indicate a cut in the benchmark federal funds rate was imminent. However, they moved past some of their initial disappointment and appeared to concentrate on comments that the Fed would step in if needed.
Bernanke, speaking at the Fed's annual conference in Jackson Hole, Wyoming, said the central bank will "act as needed" to prevent the credit crisis from hurting the national economy.
The major indexes fluctuated but held their gains after Bush spoke about details of a plan to help borrowers facing trouble paying their mortgages.
"You've got all the speeches working for the market here," said Michael Church, portfolio manager at Church Capital Management in Philadelphia. "What we've seen in the last few weeks is that Ben Bernanke and the Federal Reserve are paying attention to what's going on. They will help correct the credit markets. For now, we're in a trading range and we have to sort through this mess."
The Dow rose 119.01, or 0.90 percent, to 13,357.74. The Dow slipped 0.16 percent for the week; for the year the blue chip index is up 7.2 percent despite the volatility of the past month.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 16.35, or 1.12 percent, to 1,473.99. For the week, the S&P fell 0.36 percent, leaving it with a 3.9 percent gain for the year.
The Nasdaq composite index rose 31.06, or 1.21 percent, to 2,596.36. Bucking the trend of other major indexes, it gained 0.76 percent for the week and is up 7.5 percent for the year.
Bond prices fell. The yield on the 10-year Treasury note, which moves inversely to its price, rose to 4.53 percent from 4.51 percent late Thursday. The U.S. bond market closed early ahead of the holiday weekend, and will be closed Monday along with the stock markets.
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 hasn't yet said it will lower the fed 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.
Bush's comments that the nation's economy can "weather any turbulence" in what he termed a period of transition for the financial markets appeared to help reassure investors. He outlined proposals to assist borrowers in trouble from a pullback in the housing market and credit problems.
Economic news, as Bernanke indicated Friday, appeared less relevant than normal 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, topping a 3.3 percent increase that had been expected. The rise, which came after 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 managers index rose to 53.8 in August from 53.4 in July; the index, which measures manufacturing in the Midwest, is seen as a precursor to the Institute for Supply Management index, to be released on Tuesday.
Church said the market was helped by Friday's economic figures as well as a stronger-than-expected reading on second-quarter gross domestic product released Thursday.
"The consumer has been in the crosshairs of the bears for a while now," he said, referring to concerns that a pullback in consumer spending will upend economic growth. "I think this helps clarify a lot of the situation. The news from the consumer is good."
But despite relatively upbeat economic data, it is becoming increasingly clear that the Fed is going to have to lower interest rates to prevent the credit market turmoil from dragging down the economy, said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles.
"The impact on economic growth in the coming quarter is going to be what we have to watch in order to gauge whether this is going to be a full-on easing cycle at this point and what impact there is going to be on the financial markets.
"Volatility is going to be high in the coming weeks because the Fed's not sure what is going to happen due to these financial market interruptions and investors can't be sure either," Higgins said.
Wall Street might harbor some concern about the start of September, typically a difficult month for the stock markets as investors return from vacations and re-asses their holdings. The S&P 500 typically loses 0.7 percent in during the month and 0.6 percent in Septembers that precede an election year, according to the Stock Trader's Almanac.
Advancing issues outnumbered decliners by about 7 to 1 on the New York Stock Exchange, where consolidated volume came to a light 2.69 billion shares compared with 2.59 billion shares traded Thursday. Trading in late August often is light as investors take end-of-summer vacations.
The Russell 2000 index of smaller companies rose 9.75, or 1.25 percent, to 792.86.
The Dow Jones industrial average ended the week down 21.13, or 0.16 percent, at 13,357.74. The Standard & Poor's 500 index finished down 5.38, or 0.36 percent, at 1,473.99. The Nasdaq composite index ended up 19.67, or 0.76 percent, at 2,596.36.
The Russell 2000 index finished the week down 6.07, or 0.76 percent, at 792.86.
The Dow Jones Wilshire 5000 Composite Index _ a free-float weighted index that measures 5,000 U.S. based companies _ ended Friday at 14,847.70, down 48.51, or 0.33 percent, for the week. A year ago, the index was at 13,062.54.