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Stocks recover after Bernanke letdown

The Fed chief offers no hints of more easing, citing uncertainty in Europe and the looming fiscal crunch in the US. But earnings are strong, factory output is up, and homebuilder sentiment is at a 5-year high.

By TheStreet Staff Jul 17, 2012 9:02AM
Updated at 12:26 a.m. ET


By Andrea Tse and wire reports


Stocks were choppy Tuesday, swinging from gains to losses and back again as Federal Reserve Chairman Ben Bernanke's testimony before the Senate offered no hints of imminent monetary easing.


The Dow Jones Industrial Average ($INDU) was up 61 points at 12,788. The S&P 500 ($INX) was up 6 points at 1,360. The Nasdaq Composite ($COMPX) was up 11 points at 2,907.


Bernanke told the Senate Banking Committee that economic uncertainty is increasing because of the European debt crisis and the looming U.S. fiscal cliff, CNCB reported. "Risks to economic growth have increased," he said, and "Europe's financial markets and economy remain under significant stress."


The Labor Department reported that the consumer price index was flat in June, as expected, after falling 0.3% in May. The core figure, excluding volatile food and energy prices, rose 0.2%, also as expected, matching the prior month's rise.


U.S. factory output rose rose 0.7% in June -- reaching an annual rate of 1.4% after leaping 9.8% -- as plants made more cars, machines and business equipment, The Associated Press reported. Factories are a crucial contributor to economic expansion.


The National Association of Home Builders' sentiment index has surged 6 points in July to 35, the highest reading since March 2007, The Associated Press reported. The index rose from 29 last month, the largest monthly gain in nearly a decade.


Goldman Sachs (GS) reported second-quarter earnings of $1.78 a share on revenue of $6.63 billion, beating the average analyst expectation of $1.16 a share on revenue of $6.28 billion. 


Johnson & Johnson (JNJ) reported second-quarter earnings of $1.30 a share on sales of $16.48 billion, compared with the average target of $1.29 a share on sales of $16.69 billion.


Coca-Cola (KO) posted second-quarter earnings of $1.22 a share on revenue of $13.09 billion, topping the average forecast of $1.19 a share on revenue of $12.98 billion.


After the close, Intel (INTC) is expected to post quarterly earnings of 52 cents a share on revenue of $13.56 billion.

Yahoo (YHOO) on Monday named Marissa Mayer, a former executive with Google (GOOG), as its new CEO.

 

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265Comments
time2share
Jul 17, 2012 10:09AM
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Here is another FACT CHeck this out  : Imbedded in the OBUMMER'S HEALTH CARE BILL IS A REAL ESTATE PROPERTY TAX. Starting in 2013 all Real estate property sold in the US will pay a 3.8% Real Estate tax to the Federal Government. Another TAX OBUMMER Stuck us with and another TAX WE DO NOT NEED...!
jennygirlie bright
Jul 17, 2012 10:16AM
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I am tired of hearing about stimulus, just so people on wall street can make more money. None ot the stimulus has helped the working man and the banks are corrupt as hell. Everything is overpriced these days and we just go deeper and deeper in debt as a country. The people in Washington have no clue how to fix this mess.
Gary Myers (gmyers)
Jul 17, 2012 10:12AM
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We are rebuilding our economy on a false and flimsy foundation.  The original foundation

started decaying 35 years ago with the Carter administration and crumbled slowly until

in 2007-2008 the earth shook and the foundation completely collapsed.

 

Greed and corruption were a driving force behind the collapse along with mismanagement

on both the public and private sector side.  The result of  these failing in the past 35 eyars has been the bankrupting of the government and the almost complete collapse of the financial and

manufacturing sectors of our economy.

 

Many say the bailout and stimulus packages were a mistake.  I have yet to hear any of

them say what the alternative was to try and stablize the economy.  My thinking is that they

have no idea what they would have done they just think what was done was wrong.  That is

not a solution.

 

The banks and other financial institutiions still appear to be trying to make a buck in any

way they can.  It seems that a major scandal erupts each week with some of the major

banks and investment firms.

 

This can not continue.  It must stop and both short and long term solutions need to be found

to rebuild our economy and social order. 

 

It scares me when I see the leadership currently in place in both the publica nd private sector

today and what will be coming down the road in November. 

 

Is anyone else leary of our current or future leaders being able to get anything done? 

 

 

 

Brutus625
Jul 17, 2012 9:46AM
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MG - nobody cares about the value, as long as the numbers go up.  People love seeing the Dow near 13k, because they think it's so much better than the 10k it was a couple years ago.  Never mind that the dollar is worth much less, as long as the indices are headed north, most people don't care, they just want to see the lines climbing higher when they look at the charts in their quarterly 401k statement.

What's sad is that the S&P was at 1415 on 1/1/00, now it's at 1360.  But more importantly, what could you buy with $1415 in 2000 and how much would that same stuff cost you today? - a hell of a lot more than $1360, that's for sure. 

next time up
Jul 17, 2012 10:17AM
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The Obama adminisration has made itself inconsequential when it comes to business.  What business; other than one on the government dole, has any confidence that this present administration even has a clue.  Business exists in spite of Obama, just not as well.
stupdityofgov
Jul 17, 2012 9:54AM
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MirageGuy,
The reason the market wants QE3 and other money printing schemes, is because they cannot create any real value of their own...so they dilute everyone else's hard earned gains. 
Someone (responder10)
Jul 17, 2012 9:56AM
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Mirage said:

 

"I cannot figure out why the market would be cheering for more Debasement. Printing more money does not create prosperity. It erodes the savings of the elderly, discourages capital formation and investment, and helps to destroy demand. It does help borrowers until interest rates go up, unless the Fed holds them at zero in which case it credit dries up and the demand is destroyed for that reason."

 

Mirage:

 

I understand what you're saying, but I think the reason the market goes up with debasement is the following analogy:

 

The market is like a casino, with gaming chips.  In the past people came in "with their weatlth" to play the game.  However, people's wealth dried up and they could no longer buy any chips.   Casino profits started drying up and less and less people could participate in the game. 

 

Then the casinos came up with the idea of "loaning chips."  This worked for a while, but then people could not pay back their chip loans.

 

Finally, to keep the game going, the casinos just "created as many chips as they could and started giving them away to the people to keep the playing going."   For a long time, everyone was ecstatic about all the action.

 

This lasted until the people tried to cash their chips in for something real and could not. 

 

The market today, likes liquidity because that is all that is left to fuel its expansion, since real wealth is nonexistent.    Printing money is the new fuel for paper denominated market instruments. 

MirageGuy
Jul 17, 2012 12:09PM
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“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.” …….. Senator Barack Obama 

President Obama, FAILED LEADERSHIP indeed....
dlh2448
Jul 17, 2012 10:08AM
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Everytime I make a beer stop now I tell the clerk............ Ain't life great.... I just traded you some useless printed paper for this nice cold beer... :)
MirageGuy
Jul 17, 2012 10:20AM
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Tim2009, it is not about to much wealth at the top.   It is about the size and bloat of government.

We have 48% of the people now who pay ZERO federal income taxes.   The government spend 49,000 per family now.  If you are not paying 49,000 in federal taxes someone else is carrying your weight.

The problem is the Federal government is spending WAY too much and taxing the average person far too much.

We need to slash government spend and lower taxes.  Everyone MUST pay their Fair and EQUAL share.   Only democrats believe fair  means unequal.  And if you want unequal taxes, then how can you have anything else equal?

Sorry, but only far left wing radicals and people like Hitler believe you can improve the life of the poor by theft from the rich.


MirageGuy
Jul 17, 2012 9:32AM
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I cannot figure out why the market would be cheering for more Debasement.  Printing more money does not create prosperity.  It erodes the savings of the elderly, discourages capital formation and investment, and helps to destroy demand.  It does help borrowers until interest rates go up, unless the Fed holds them at zero in which case it credit dries up and the demand is destroyed for that reason.

You cannot debase your was to prosperity.  However, stock in wheel barrel companies might be a good investment....
steveG1956
Jul 17, 2012 9:43AM
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i imagine 80% of the market is actually institutional buying.  and these fund managers get bonus' based on buying-profiting.  ANYway they can get an increase is fine with them.  THEY get a bonus far in excesss of the resulting inflation we're going to have so it's fine with them.  THEY get their cookie and the rest of the world, who cares! 

 

>>>>I cannot figure out why the market would be cheering for more Debasement.  Printing more money does not create prosperity.<<<<<

Nostracomas X
Jul 17, 2012 10:47AM
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Oh what a shame - looks like no free money from the Feds for the parasites....... they will now  resume the raping, pillaging and plundering of the people. I hope these crooks can run faster than 2800 FPS - time for talk is over - further action is needed by the people now. Congress and the media will not help, they are bought and paid for by the same crooks.....
cat_man_do
Jul 17, 2012 11:07AM
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We need to get Wall St out of the Govt and the Govt out of Wall St! We need to beat the for profit money changers (lobbyists) out of the halls of Congress. Until this happens, you won't know who your elected official is serving!
MirageGuy
Jul 17, 2012 10:44AM
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Did any of you hear "57 States" latest rants on the campaign trail on how "small business only has success because of government?  We didn't grow our business, because of our hard work but because of government help"?

Mr. Obama you are truly clueless.   I grew my business in spite of government interference and road blocks.   Government has been a deterrent the whole way.  From sucking capital out of the business in the form of taxes, to silly regulations.   Every dime I pay in taxes is paid for by higher prices to customers.   Every dime in taxes is one less I have to grow my business and hire people.

I content that has to be right up there with some of your other dumb comments....  "57 States", "Marine corpsmen are the best undertakers in the world", "The private sector is doing fine",  "Polish Death Camps"  
Selaretus slainte
Jul 17, 2012 10:45AM
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Good! I'm glad that ol' Ben finally realizes that printing money and throwing it at the problem without correcting the intrinsic problems and underlying corruption DOES NOT WORK! Easing brings very short term relief only because it creates 'feel good' and 'we're saved' rallies that are not based on anything real. Time to pay the piper and reap what we have sown. The can has been kicked into a corner with no where else to go.
MirageGuy
Jul 17, 2012 11:32AM
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Mnsurfer, you are as clueless as Obama....\


My business doesn't require government services at all...  Yous analogy that my business is helped with school 'free lunch' programs is utter nonsense.   What did we do before we had free lunch programs?  

Think back into history...  Did business need government for anything?   The answer is pretty much No.  Government should be paid for by citizens not legal entities.  Government taxes on companies is nothing more than hidden sales taxes.   Why  not just put them out in the open?   When you raise my taxes, the first thing I try to do is see if I can pass this cost on to my customers.  Failing that I cut costs with layoffs and reduced purchases of supplies.

Taxes are a BRAKE on business.  If you want to increase demand do you RAISE taxes?   Lowering taxes creates demand as  it lets people keep the money they earn to spend or invest.

Lower government spending requires lower taxes, which is good for the economy.  Higher government spending is like slamming on the economic brakes.  

Democrats need to read more about free market capitalism, and less Karl Marx....

Mnsurfer
Jul 17, 2012 11:14AM
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I would challenge you to identify an industry that isn't getting some form of government "aid"--there are military contracts, school lunch programs, the medical industry (medicare), bank bailouts, etc.  Education which is government funded trains workers for industry.  Hell, we even subsidize the tobacco industry even though it kills people.

 

We don't have capitalism in this country and never have.  And I for one am tired of hearing people  suggest that business is somehow self sufficient and independent of government beyond creating the right sort of business environment, free of regulation.  If you accept government money, there should be strings attached.  The trouble is, business wants the subsidies but doesn't want the strings.

 

The question is what should the government be supporting?  It's gotten to the point where everyone is on the dole.  When business gets off the dole, then I will listen to what business has to say.

stupdityofgov
Jul 17, 2012 10:15AM
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Time2share,

Yep, I've read that before. One of a thousand reasons to vote him out this November!!!!


A Sharp
Jul 17, 2012 10:43AM
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All business owners, even managers of same, should be fighting mad about our very misinformed POTUS saying that we owe our success to the government helping it. WHAT?!?!? First of all, I didn't recieve any stimulus money for mine - did any of you? Our POTUS flung all of that stimulus to the wind and it blew back in our faces with unemployment up @ 8.2%. And now some of you are crying foul because the GOVERNMENT won't ease up on that easy, cheap money that none of you will ever see. At least uncle Ben has some scruples, not flushing our economy further down the drain. Stop depending on government handouts and build something yourselves- It's the only thing that really works in a FREE MARKET SOCIETY!!!
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