Wall Street jumps on Bernanke remarks

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(Agencies)
Updated: 2009-08-22 09:26

For the week, the Dow rose 2.0 percent, the S&P 500 gained 2.2 percent, and the Nasdaq added 1.8 percent.

About four stocks rose for every one that fell Friday on the New York Stock Exchange where consolidated volume came to 5.88 billion shares, up from Thursday's 5 billion.

Bond prices tumbled. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.56 percent, from 3.44 percent late Thursday.

The Russell 2000 index of smaller companies rose 12.83, or 2.3 percent, to 581.51.

In other signs of investors' growing confidence in the economy, oil prices touched their highest point of the year on hopes that energy demand will soon pick up. After nearing $75, light, sweet crude for October delivery rose 98 cents to settle at $73.89 a barrel on the New York Mercantile Exchange.

And the dollar, which, like Treasurys, is considered a safe-haven asset, tumbled against other major currencies.

While Bernanke's comments were clearly reassuring for the stock market, investors could quickly lose their optimism if one of their greatest concerns, consumer spending, shows more signs of weakness. The Fed's upbeat comments last week set off a rally that quickly stalled after a weak reading on consumer sentiment.

Next week, investors will get two key reports on consumer confidence that, if worse than expected, could easily upset the market's gains.

"We're not past the volatile stages of the market," said Lowell Pratt, president of The Burney Co., an equity management firm.

As job losses continue to mount, it will be difficult for consumers to feel comfortable about spending freely.

"Consumer spending normally is the driver of recoveries at the beginning," said Bob Baur, chief global economist at Principal Global Investors. "That's not happening this time."

"At some point, the market is going to ask to see more than just mixed data," he said. "It's going to want to see some real jobs produced and an end to job losses and some validation that the consumer isn't going to stay in a slump."

Analysts have long warned of an eventual decline in stocks after the market's massive jump since early March, during which major indexes have risen more than 45 percent off of 12-year lows. But the market has yet to see a significant pullback.

Overseas, Japan's Nikkei stock average fell 1.4 percent. Britain's FTSE 100 gained 2.0 percent, Germany's DAX index jumped 2.9 percent, and France's CAC-40 soared 3.2 percent.

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