Bernanke helps stocks end August as winners

The Dow ends up 90 after the Fed Chairman says the central bank won't shy from trying to boost the economy. Facebook hits a new low. Gold hits a 5-month high. September historically can be rough.

By Charley Blaine Aug 31, 2012 11:38AM
Charley BlaineUpdated: 6:42 p.m. ET

Stocks enjoyed a solid rally today and ended August with their seventh gain in eight months after Federal Reserve Chairman Ben Bernanke vowed to continue the Fed's policies of low interest rates and possible bond purchases to boost the economy.

In a Jackson Hole, Wyo., speech, the Fed chairman said the central bank would act because the economy has been slow to recover from the Great Recession of 2008-09. And, he added, "it is important to achieve further progress, particularly in the labor market." Bernanke's vow cheered Wall Street, which was in a buoyant mood anyway because of hopes that leaders in Europe are closing in on their own plan to stabilize financial markets on the continent.

Housing, metals and gold stocks led the market higher, though profit-taking sapped gains. Toll Bros (TOL) was up 34 cents to $32.72. PulteGroup (PHM) added 33 cents to $13.68, and Ryland (RYL) rose 81 cents to $26.81. U.S. Steel (X) gained 13 cents to $19.45. Newmont Mining (NEM) climbed $2.13 to $50.68 and was the top performer in the Standard & Poor's 500 Index ($INX). Gold (-GC) settled at a five-month high.

U.S. markets will close Monday for Labor Day.

The Dow Jones industrials ($INDU) closed up 90 points to 13,091. The blue chips had been up as many as 151 points. The S&P 500 gained 7 points to 1,407, and the Nasdaq Composite Index ($COMPX) had added 18 points to 3,067. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was up 19 points to 2,772. Apple (AAPL), the biggest influence on the index, was up $1.37 to $665.24.

Article continues below.
There was a downside to an otherwise cheery day. Facebook (FB) hit a new all-time low of $18.03 today before closing at $18.06, down $1.03.

BMO Capital Markets analyst Daniel Salmon predicted the stock could drop to $15 as selling restrictions on major shareholders come off and advertisers continue to fret about the problems Facebook was having getting advertising to mobile users.

The stock is off 52.4% from its IPO price of $38.

Stocks end August with gains; fall for a second week
The market finished higher for August -- the major averages' seventh monthly gains in 2012 and 10th gains in the last 11 months. However, the averages did fall for the second straight week.

The Dow ended August up 0.6%. The S&P gained 2%, with the Nasdaq up 4.3%. For the year, the Dow is up 7.2%, with the S&P 500 up 11.9% and the Nasdaq up 17.7%.

With Thursday's sell-off, which pushed the Dow down 107 points, the blue chips had been looking at a tiny loss for the month.

The Dow was off 0.5% for the week, with the S&P 500 off 0.3% and the Nasdaq down 0.1%.

While a gain for the month was lovely news for bulls, the market now heads into September -- the worst month for the Dow, S&P 500 and Nasdaq for at least 40 years, according to the Stock Trader's Almanac.

The Dow has fallen an average 0.8% in September between 1952 and 2011. September is also a wildly volatile month. The index fell 6% in September 2011 and 7.7% in September 2010.

Markets for the week



8/31/2012

8/24/2012

% chg.

YTD chg.
Dow Industrials

13,090.84

13,157.97

-0.51%

7.15%
S&P 500

1,406.58

1,411.13

-0.32%

11.85%
Nasdaq 

3,066.96

3,069.79

-0.09%

17.73%
Russell 2000

812.09

809.19

0.36%

9.61%
Crude oil 

$96.47

$96.15

0.33%

-2.39%
(per barrel)

0.00

0.00

0.00%

0.00%
U.S. Dollar Index 

81.22

81.60

-0.47%

0.86%
10-yr. Treasury

1.56%

1.68%

-6.91%

-16.52%
Gold

$1,687.60

1,672.90

0.88%

7.71%

The Fed's options
So, what could the Fed do? Analysts says the Federal Open Market Committee, the Fed's policy-making body, may announce a new round of so-called quantitative easing. Technically, this means purchases of Treasury securities and mortgage-backed securities to reduce borrowing costs and spur investment.

Others expect instead the Fed will announce its intent to keep its benchmark interest rate near zero beyond its current forecast of late 2014.

Bernanke offered a fairly robust defense of the Fed's quantitative easing programs. The programs helped boost economic output by two percentage points, he said, and boosted employment by some 2 million jobs more than what might have occurred in the absence of any moves.

He said the economy faces three big head winds:
  • A still weak housing market. In past recessions, housing has led the economy out of recession.
  • Fiscal policies. Federal and state spending is falling on an inflation-adjusted basis and is a drag on the overall economy.
  • Credit market stresses. Read Europe in particular.
Bernanke's view is not universally shared. Richard Fisher, president of the Federal Reserve Bank of Dallas, and Charles Plosser, president of the Federal Reserve Bank of Philadelphia, have both argued against more Fed moves.

Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$96.47

$94.62

9.55%

-2.39%
(per barrel)











Heating oil (-HO)

$3.1802

$3.1333

11.66%

9.13%
(per gallon)











Natural gas (-NG)

$2.7990

$2.7480

-12.78%

-6.36%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.9728

$2.9080

7.15%

11.87%
(per gallon)











Brent crude 

$114.57

$112.65

9.20%

6.70%
(per barrel)











Retail gasoline

$3.8290

$3.8260

9.40%

16.88%
(per gallon; AAA)












Gold, crude oil move higher
Commodity prices moved up with the cheer over Bernanke's speech and the hope that stimulus -- when it comes -- helps economies around the world. Crude oil (-CL) settled up $1.85 to $96.47 a barrel in New York. Brent crude added $2.01 to $114.66 a barrel.

The national average retail price of gasoline hit $3.829 a gallon, up from $3.826, according to AAA's Daily Fuel Gauge Report. Seven states -- Hawaii, California, Illinois, Michigan, Connecticut, Washington and Oregon -- reported the average price was above $4 a gallon.

Hurricane Isaac pushed energy prices higher for the week. Crude was up 0.3%, but natural gas jumped 3.6% to $2.799 per million British thermal units. The retail price of gasoline was up 2.7%.

Gold jumped $30.50 to $1,687.60 an ounce and finished up 0.9% for the week. There was chatter today that the metal could hit $1,900 by year-end. One reason for the jump was Bernanke's speech. But the hopes for some sort of deal in Europe also contributed.

Silver (-SI) jumped 99.6 cents to $31.442 an ounce. Copper (-HG) added a penny to $3.457 a pound.

Europe starts the rally
European stocks were the initial catalyst for today's rally, with German and French stocks up better than 1%.

One reason was a story in the German newspaper Bild that Jens Weidmann, president of the German Bundesbank, had considered quitting rather than endorse a plan for the European Central Bank to buy bonds of troubled European countries.

That was a signal to some that the plan has traction and could be endorsed at an ECB meeting next week. But that decision won't have real teeth unless Germany's high court says it's legal for Germany to participate. A ruling is expected on Sept. 12.

Intel, American Express, Microsoft lead the Dow

Twenty-six of the 30 Dow stocks were higher today, led by Intel (INTC), Microsoft (MSFT) and American Express (AXP). Merck (MRK), Pfizer (PFE) and AT&T (T) were the laggards. (Microsoft publishes MSN Money.)

Meanwhile, more than 410 S&P 500 stocks are higher, led by Newmont Mining, Freeport-McMoran Copper & Gold (FCX) and Goodyear Tire & Rubber (GT), . The laggards are Frontier Communications (FTR) and Phillips 66 (PSX).

In addition, 84 Nasdaq-100 stocks are higher, led by Randgold Resources (GOLD) and Electronic Arts (EA). Nvidia (NVDA) and Research In Motion (RIMM) were the laggards.

Chicago purchasing managers see 'anemic' economy; consumers feel better
The market has so far ignored two economic reports.

First, the Chicago Purchasing Managers Index slipped to 53 in August from 53.7 in July. Growth appears anemic, the organization said.

But the University of Michigan's Consumer Sentiment Index rose to 74.3 at the end of August, from 73.6 in the first half of the month. Most of the gain was an assessment of current conditions. Expectations were down slightly from July.

A very important two weeks
The markets face a volatile two weeks at the very least. Next week is all about the lead-up to the European Central Bank's interest rate meeting on Thursday and the August jobs and unemployment report in the United States on Friday.

Tuesday: The ISM Manufacturing Report for August, the Commerce Department's report on construction pending in July and the August report on auto sales.

Wednesday: A government report on labor-force productivity.

Thursday: Challenger Gray & Christmas's layoff report for August; the ADP National Employment Report, the ISM non-manufacturing report. and Energy Department reports on oil and natural gas inventories.

Friday: The jobs report. Analysts expect around 130,000 jobs created. The unemployment rate will hold at 8.3%.

The week following includes the Fed's meeting on Sept. 12-13 and the German court decision on the legality of its participation in European debt solution plans, also on Sept. 12.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.100%

-10.00%

800.00%
5-year Treasury note 

0.596%

0.658%

-0.50%

-28.19%
10-year Treasury note

1.562%

1.620%

4.69%

-16.52%
30-year Treasury bond

2.684%

2.738%

4.15%

-7.10%
Currencies











U.S. Dollar Index

81.216

81.713

-1.81%

0.86%
British pound

1.5881

1.5793

1.27%

2.21%
(in U.S. $)

 








U.S. $ in pounds

£0.630

£0.633

-1.25%

-2.16%
Euro in dollars

$1.26

$1.25

2.29%

-2.89%
(in U.S. $)

 








U.S. $ in euros

€ 0.795

€ 0.799

-2.24%

2.98%
U.S. $ in yen 

78.33

78.62

0.27%

1.59%
U.S. $ in Chinese

6.34

6.35

-0.20%

0.30%
yuan











Canada dollar

$1.015

$1.008

1.77%

3.43%
(in U.S. $)

 








U.S. dollar 

$0.985

$0.992

-1.74%

-3.39%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,687.60

$1,657.10

4.79%

7.71%
(per troy ounce)

 








Copper (-HG)

$3.457

$3.447

1.16%

0.61%
(per pound)

 








Silver (-SI)

$31.4420

$30.4460

12.64%

12.63%
(per troy ounce)

 








Wheat (-ZW)

$8.895

$9.0300

0.14%

36.27%
(per bushel)

 








Corn (-ZC)

$7.995

$8.085

-0.68%

23.7%
(per bushel)

 








Cotton 

$0.7726

0.7694

8.30%

-15.73%
(per pound)

 








Coffee

$1.6475

1.634

-5.53%

-28.26%
(per pound)

 








Crude oil (-CL)

$96.47

$94.62

9.55%

-2.39%
(per barrel)










 

246Comments
Aug 31, 2012 12:07PM
avatar
Debasing the currency or printing money never created a single job.   1923 Germany tried massive printing, did it lead to jobs?  Devaluing a currency by fiat money creation does not create jobs.  It punishes capital formation, and thus at best can be considered a mild cause of unemployment.

Government policies that discourage business and a repressive tax system that punish success destroy jobs.  We have plenty of that.  That is why after nearly 4 years unemployment is far above where it started when Obama took office.  

Liberals need to learn government does not create jobs, it destroys them.   Growing government SHRINKS the private sector, and that is where jobs are created.   The best way to create jobs is to SHRINK the size of government.   
Aug 31, 2012 2:09PM
avatar

QE1&2 worked very well, it got the price of gas up from under $2 in 2008 to $4 now and also raised the price of everything except labor. The Feds money printing is the biggest threat to

the working class today. Great for Wall St.,poison for main St.

avatar

Quote

In a Jackson Hole, Wyo., speech The Fed chairman said the central bank would act because the economy has been slow to recover from the Great Recession of 2008-2009. And, he added, "it is important to achieve further progress, particularly in the labor market."

 

Just how is Bernanke going to get the labor market up??? The Federal Reserve has only one way of pumping money into the system and that is directly into the hands of the Wall Street bankers who then steal the money for their own pockets.

 

Nothing is going to be done as normal. We are fast approaching the total economic collapse of the USA perhaps weeks away now

Aug 31, 2012 12:09PM
avatar

just another end of the month bait and switch...

 

But it wont help Mr O

 

The new era has commenced last night!

 

MITT for President!

Aug 31, 2012 1:03PM
avatar
How much did it cost taxpayers to have Ben Bernanke hold the meeting in Jackson Hole one of the most expensive places in the U.S. It is the hangout of the rich and famous. Why not hold it in Indianapolis or some other mid west city that has more reasonable priced meeting halls. Just another example of BIG GOVERMENT WASTE!!!!
Aug 31, 2012 3:26PM
avatar
P.S. Using the government to redistribute the wealth will not grow the economy. ( I do think the tax code needs overhauled to cut out the loopholes and the rich should pay a little more because it is fair) At any rate, even if you took ALL the 1% had, it wouldn't last a year. There is no golden egg. What we need is more focus and policy on growing the pie and trickle down- not trying to just take the pie you have and cut it differently then eat the whole thing- then- no more pie ! I further believe that if your government leaders are corrupt- it doesn't matter what form of government you have. If you want a representative democracy- you MUST throw special interests out of D.C.- no if, ands, or buts on that one.
Aug 31, 2012 12:44PM
avatar
How much did the trip to wyoming cost the tax payer?????  could have been done on line cheaper!!!!!!!  they do have conference blogs that can be used or phones. guess they can't see the local talent that way??  TO late to do anything now he already made promises they are warming up the presses now!!!!!!
Aug 31, 2012 12:38PM
avatar
I've got it !!  B.B. and the fed will have to hire more people to print more fake money.POOF, lower unemployment ! ! !
Aug 31, 2012 12:32PM
avatar

From the story:  "Bernanke offered a fairly robust defense of Fed's quantitative easing programs. The programs helped boost economic output by two percentage points, he said, and boosted employment by some two million jobs more that what might have occurred in the absence of any moves."

 

I'd say the job that Bernanke is most concerned about is his own.  The programs of the Fed have done one thing, and one thing only, and that is falsely boost the prices of stocks by throwing money at the markets.

 

How many hundreds of billions of dollars has the Fed spent to "boost economic output"?  Not to mention that by any measure of a normal recovery, the numbers are dismal at best?  Then on top of that, to say the unemployment number which has been above 8% for over 40 months now, is not worse because of Fed policy, is delusional.  Especially in light of the fact that the millions who have quit looking are not counted any longer.

 

Even in a poor economy, you can get periods where things will improve slightly, even in the absence of the Fed throwing hundreds of billions of dollars at the market.

 

 

Aug 31, 2012 1:55PM
avatar
their all a bunch of s****ing thieves,just waiting for more hand outs and more people to steal from. 
We just got an enormous thank you from GMC by way of investing a Billion dollars in Russia. Gee aint that just swell

what a bunch of F---ing Assh0les 
Aug 31, 2012 12:58PM
avatar
Sniff sniff....is that another bailout I smell? No problem, the American taxpayer has deep pockets to throw at those poor traders.
Aug 31, 2012 1:51PM
avatar
forget USA...those days are gone...now it's the United State of WELFARE...the new USW
Aug 31, 2012 3:35PM
avatar
If you do not cut Spending, you are Pi$$ing in the wind.  Period.
Aug 31, 2012 12:23PM
avatar
Here goes the media spin. No promise of QE3 was made. All balledy said was the obvious; I will continue the market bubble as long as necissary until election time. We will tweak the data within reason to reflect positive trends because I want my job next year.
Aug 31, 2012 4:15PM
avatar

Jennygirlie,

Oil goes up as the value of the dollar decreases. The FED keeps printing and the value of the dollar keeps falling. This will not lead to the recovery that they think it will. As the portion of the average family's income devoted to basic food and energy increases the amount of disposable income decreases. Additionally as the amount of uncertainty over their well being increases the average person will be less likely to spend.

 

The result is a net negative for the economy.  

Aug 31, 2012 3:57PM
avatar

How can oil going up all the time help the economy and put more money in the consumers pocket to spend. Every time there is a hope of stimulus commodity prices rise and we get screwed even more.

It is all about the greed on RIP OFF STREET.

Aug 31, 2012 1:40PM
avatar

Commodity prices up on Ben's speech! China just made a bundle on it!  Our cost on everything just jumped again!

 Could not beat us, now they own us with out a shot being fired ,THANKS to our GREEDY leaders an their partners the speculators world wide!!!!!!!!!!!!!!!!!!!! KEEP UP THE GOOD WORK we are doing so good with your help !!!!!!!

Aug 31, 2012 1:33PM
avatar
This is the worst economy we have seen in many many years, throwing more money is not going to do a thing...What we need is jobs and a new CINC. This incompetent, arrogant, narcissist, inept community organizer already failed...We need President Romney and Dow 15,000 in a matter of days. No doubt at all.
Aug 31, 2012 4:28PM
avatar

I think I finally figured this out.

 

1. The stock market has nothing to do with the state of the economy

2. The stock market always goes up on Fridays

3. QE 3 hopes change on odd and even number days.

4. If the stock market is down today buy it and then sell tomorrow.  Rotate every other day and you will make millions.  If not, then skip one day and repeat the process.

5. Everyone hates the way the stock market works

6. This particular segment of MSN is for those dirty old men that want young girls or young girls that want a sugar daddy.

 

Ta da !!!!

 

Aug 31, 2012 2:05PM
avatar
Shoot..... if all they have do to is promise to help and things improve why don't they run the Surgeon General out there and maybe obesity will go away.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More


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