Stocks rally as Bernanke doesn't rule out stimulus

The Fed chief says he's open to more easing but does not commit. Factory orders rise more than expected, while the Chicago PMI slows. Consumer sentiment increases. Facebook sinks to all-time low.

By Melly Alazraki Aug 31, 2012 9:12AM
stock marketLast updated at 11:41 a.m. ET

U.S. stocks went on a wild ride after Federal Reserve Chairman Ben Bernanke released a much-anticipated policy speech. While he didn't commit to any stimulus, he said he is open to more stimulus. Meanwhile, data showed Chicago PMI decelerated and consumer sentiment and factory orders increased. European shares and commodities rose as well.

The Dow Jones Industrial Average ($INDU) was up 129 points at 13,130. The S&P 500 ($INX) was up 11 points at 1,411. The Nasdaq Composite ($COMPX) was up 23 points at 3,072.

After a couple of weeks of speculation and low activity in the market, Bernanke finally addressed a symposium of central bankers in Jackson Hole, Wyo.

In his speech, Bernanke said he is open to using more quantitative easing but did not commit to taking action. The Fed chief said that "stagnation of the labor market in particular is a grave concern" and called the current growth "tepid." "The economy," he said, "needs more policy support than usual at this stage of the cycle."

U.S. markets closed sharply lower Thursday, with the Dow barely finishing above 13,000 and the S&P 500 closing just below 1,400. The Nasdaq was down 1%.
ECB may announce stimulus next week
European stocks extended their gains around midday Friday after four days of losses ahead of Jackson Hole, despite data showing the region's unemployment rate remained at 11.3% in July, the highest level on record.

Also, inflation in the eurozone accelerated to 2.6% in August from 2.4% in July but is expected to slow to 2% by the end of the year -- not high enough to prevent the European Central Bank from implementing any easing measures.

The ECB's monthly policy-setting meeting takes place Sep. 6. Many observers hope ECB President Mario Draghi will shed some light on ECB bond-buying plan that could help lower the cost of borrowing for several eurozone nations. But not everybody supports the plan, most notably the German central bank. The disagreement is so fierce that a news report Friday said Bundesbank chief Jens Weidmann has considered resigning.

Asian shares finished mostly lower despite data the Indian economy grew faster than expected but after an unexpectedly negative reading on Japan's industrial production for July.

US data
The Chicago-area purchasing managers index for August decelerated slightly to a reading of 53.0 in August from 53.7 in July. This was in line with Briefing.com's forecast.

The University of Michigan's consumer sentiment index rose to 74.3 in August, compared with initial reading of 73.6, showing an improved view of consumers about the U.S. economy. Economists had expect the index to tick up to 74, according to Briefing.com.

New orders for U.S. factory goods rose 2.8% in July, posting the biggest increase since July 2011 and rising for the second time in three months, the Commerce Department reported. The increase was more than the 2% economists expected, according to Briefing.com.


Stocks to watch
Google (GOOG) CEO Larry Page and Apple (AAPL) CEO Tim Cook have been conducting behind-the-scenes talks about a range of intellectual property matters, including the mobile patent disputes between the companies, Reuters reported, citing unnamed sources.

Facebook (FB) has sunk to new all-time lows after BMO Capital analyst Daniel Salmon slashed his price target on the shares to $15 from $25. Salmon wrote that many advertisers appear to be reducing the amount of money they're spending on the website and predicted that Facebook may have difficulty increasing its revenue by more than 4% in the current quarter, the flyonthewall reported.

SAIC (SAI) rose after the government contractor's announcement that it planned to split into two publicly traded companies.


Splunk (SPLK) rallied after the software maker reported a loss that handily beat estimates and raised its outlook.


Zumiez (ZUMZ) said fiscal-second-quarter earnings slipped 19% as expenses increased. The teen-apparel retailer also projected current-quarter earnings below Wall Street estimates.


Zynga (ZNGA) has lost two more executives. That follows the departure of chief creative officer Mike Verdu earlier this week and chief operating officer John Schappert earlier this month.


Amazon.com's (AMZN) latest Kindle Fire e-reader will reportedly have mapping features through a joint venture with Nokia (NOK), according to Reuters. This comes a day after the e-tailer came under hot water for sales figures of its Kindle.

297Comments
Aug 31, 2012 10:08AM
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We need another stimulus like we need another free trade agreement.  Both will do nothing to help improve the economy.
Aug 31, 2012 10:37AM
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Ben Dover Bernanke is the epitome of insanity.  He continues down the same path, expecting different results.  Or.....perhaps he's intentionally assisting the demise of our once great nation.  I'm wondering what mechanism, short of a full blown revolution, will bring our dear USA back.  These are scary times we live in if you're paying attention.
Aug 31, 2012 10:34AM
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What a cheap political stunt!!! Bernie let some gas out and markets went on a wild ride. Are those investors/speculators all imbeciles?  Dirty trick. 
Aug 31, 2012 10:01AM
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The Fed has printed over 7 TRILLION dollars in teh last 5-6 years.  If printing money worked, we wouldn't be having such a terrible recovery with 17-20% real unemployment.
To put the number "trillion" into perspective, one trillion SECONDS is equal to a bit over 32 THOUSAND YEARS!  So, no, the Fed needs to be shut down, as everything they've done has made things worse.  The bill in the House to audit the Fed passed by roughly 3/4 majority, but Senate leader Harry Reid refuses to let it come up for a vote, despite being on record repeatedly saying the Fed needs to be audited and be subjected to greater scrutiny.

Aug 31, 2012 10:07AM
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Today is gonna be an "E" ticket ride.  Fasten your seatbelts.

 

More financial crack or time to sober up and really fix something. I vote we sober up.

 

I bet Ben will only hint that they "could" possibly do more if conditions require it.  A hint doesn't cost anything and has the same effect as a real QE in this environment.

 

There's already plenty of money in the banking system.  That ain't the problem.  

Aug 31, 2012 10:32AM
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Dear Mr Bernanke,  better to keep your mouth closed and be thought a fool that do QE3 and remove all doubt.   Gee Wallstreet, speculation...that's so fricken unlike you.  Idiots.
Aug 31, 2012 10:07AM
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hmm and where did I hear this nonsense before?? tripling down on failed obama regime policies, and where the hell are we going to get this money for QE3, is it going to rain down from heaven? is george "I'm a homo in denial and best buds with osama" clooney going to lend it to bernanke? can we get it from that filthy ugly rancid leftist pig ellen barken who's face can stop a sun dial and who wanted the hurricane to kill all the Republican delegates? or the stupid comments made by samuel l. jerkson, which of course he had to apologize all over Twitter for, meanwhile how pathetic is that, these idiots always apologize for comments that everyone knows is what they truly believe, so once again where is this money coming from? cuz John Q. Public is turning his pants pockets inside out and there's nothing coming outta them, well except maybe some lint and dust!!!
Aug 31, 2012 10:51AM
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Wealth creation, ultimately comes from labor and innovation.   The idea that we can replace labor and innovation with "MONEY PRINTING" is so absurd and just goes to show the bizzaro world that we currently live in. 

 

It is as if these politicians and policy makers FAIL TO UNDERSTAND THAT THEY CREATED THIS BLOATED, ECONOMIC ILLUSION AND NOW THEY FIGHT TO DO EVERYTHING TO MAINTAIN THE ILLUSION.    

Aug 31, 2012 10:45AM
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B.B says pretty much nothing and . . . . . POOF !!! the world is fixed again,yaaayyyyy ! ! !The fantasy market soars and oil goes back toward the roof !POOF,  POOF  POOF ! ! ! ! What a steaming,fresh fly covered pile of shhh   crap.
Aug 31, 2012 10:29AM
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Read between the lines from BEND OVER, America. He is vague about his QE3. Couldn't do it yet. Not close enough to the election for his short term spike. His hint is giving the big money players to set themselves for devaluing our currency more. Once they are set to make their percentage drop, you'll see QE3.
Aug 31, 2012 10:44AM
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The REAL Four Horsemen of the Apocalypse... Administrators, Lawyers, Politicians and Financiers. Each of the four take without putting anything into the economy. Any wearing two of these hats is doing something corrupt. All four can be bought and deployed as puppets. All four have to go.

Close the banks, end the Federal Reserve, get rid of Wall Street. If we aren't 100% invested in job recovery now, we won't be here by the New Year.

Aug 31, 2012 11:06AM
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The FED has painted themselves into a corner. If they go ahead with QE3, that's pretty much an admission hat the economy still isn't strong enough to stand on it's own two feet. On the other hand if they do nothing they run the risk of having at least a 10% correction on Wall street to the down side. As someone already commented (correctly I might add) he did the best thing he could do. Hint at POSSIBLY more stimulus if needed but promised nothing. The result....Markets UP!!!!  IMO FED stimulus only helps the markets not the economy and the current market is overbought.
Aug 31, 2012 10:35AM
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Businesses are only in it to make a profit. They don't care about jobs for the country. Our economy is being held by 3 major payers:

1. Consumers

2. Businesses

3. Government

Business will not expand if there is no demand. That demand comes from consumers or purchases from the government.

Consumers are losing jobs and confidence. Scared people hoard and do not spend. The paying down of debt and increases in the savings rate shows this is the case.

The only other major player that could move the economy and stop this deflationary cycle is government, whether by unfunded spending or by taking "idle" money from those who aren't using it and stimulating the economy.

Our government is crippled by a congress that is deadlocked. That's where we are today. Until one of the three players gets moving, the economy will continue to limp along. It will slowly get better all by itself since consumers will finally paid down debt to a level where they will be willing to spend again and as they start buying new things as the old things wear out and have to be replaced. Also the boomers retiring at around 300K per month will free up jobs for the next generation and both their spending, by So-So Security and the "new" old jobs will slowly increase the GDP.
Aug 31, 2012 9:44AM
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buy now - FAST.  then sell in about an hour when Bernanke speaks
Aug 31, 2012 10:55AM
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The last thing this country need is another stimulus.  If failed before and will fail again.  Come on Dem's get your act together.
Aug 31, 2012 11:22AM
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I hope that was Bernanke's money that he was hinting about giving the wall streeters! He's given them enough of our money and supported them.
Aug 31, 2012 11:01AM
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We don't need more stimulus. all it will do is create higher inflation. With fixed and low wages inflation will reduce consumer buying power. The economy is getting better because the fed has not provided more stimulus. We need (real) inflation to be between 1/2% deflation and 0% inflation. We don't need more stimulus, the fed needs to reduce the money supply.

Aug 31, 2012 9:52AM
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Why doesnt the market anticipate a speech everyday? It would be over 15 in a couple of weeks.

If he actually gave a speech, we could all retire by Christmas

Aug 31, 2012 10:57AM
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You Lib's need to get your facts straight and quit listening to the main stream liars.  There is no improvement!  No improvement!  No improvement!  Got it!
Aug 31, 2012 11:32AM
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Like the Harvard students, Bernanke is going to bankrupt us.

STIMULUS...my A S S

Let us business owners run the economy

 

If the Fed wasted 44 cents of every dollar we sent them,

what does it say about them running the economy.

 

GREECE FACTOR IS COMING...............................

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