Wall Street holds gains as Fed Chairman Ben Bernanke speaks
NEW YORK - Wall Street held on to sharp gains today after Federal Reserve Chairman Ben Bernanke gave no clues about the central bank's intentions when it meets to discuss interest rates next week.
Traders had been hoping Bernanke would give some indication during a speech to Germany's Bundesbank about the Fed's next move. Wall Street is looking for a rate cut to help bolster the U.S. economy and ease problems caused by tightening credit availability.
Instead, Bernanke talked about the need for countries around the globe to cooperate toward economic stability. He said "global imbalances" occur when countries run up trade deficits or produce big trade surpluses.
The stock market has been volatile since midsummer, with jitters high about the sluggish housing market and debt aversion causing a standstill in the credit markets and damaging the economy. Last Friday's jobs report, which showed the first monthly payrolls decline in four years, aggravated those concerns. Mark Zandi, chief economist at Moody's Economy.com, predicted the risk of a recession in the next six to 12 months has increased to nearly 40 percent from less than 15 percent before subprime concerns began riling the markets.
Investors nervous about the U.S. economy slipping into recession got a bit of relief from the Commerce Department's report on the U.S. trade deficit. The trade gap narrowed modestly in July to $59.2 billion from $59.4 billion in June, thanks to record exports of farm goods, autos and other products. Many economists had anticipated a widening in the deficit.
The Dow Jones industrial average rose 103.24, or 0.79 percent, to 13,231.09.
The Standard & Poor's 500 index rose 9.93, or 0.68 percent, to 1,461.63, while the Nasdaq composite index rose 20.64, or 0.81 percent, to 2,579.75.
Bonds fell as investors withdrew money to buy stocks, pushing the 10-year Treasury note's yield up to 4.33 percent from 4.27 percent late Monday. The dollar weakened against the euro and British pound, while gold moved higher.
The Nasdaq got a particularly big boost due to ImClone Systems Inc., which along with Bristol-Myers Squibb Co. said the drug Erbitux improved the survival rate of lung cancer patients in a late-stage study. ImClone soared $8.15, or 21.6 percent, to $46.08. Bristol-Myers rose 23 cents to $28.23.
The Dow, meanwhile, benefited from strong gains in McDonald's Corp. shares. The fast food chain, which is one of the 30 companies that makes up the blue-chip Dow, rose $2.18, or 4.3 percent, to $52.33 after reporting that global sales at restaurants open at least a year rose 8.1 percent in August.
Crude oil rose 4 cents to $77.53 as energy traders anxiously awaited word from the Vienna meeting of the Organization for Petroleum Exporting Countries. It was expected that OPEC would keep current output targets in place, although Saudi Arabia has been said to be pushing for a production increase.
Advancing issues outnumbers decliners about 2 to 1 on the New York Stock Exchange, where volume came to 411.7 million shares.
The Russell 2000 index of smaller companies was up 5.97, or 0.78 percent, at 775.78.
Overseas, Japan's Nikkei stock average added 0.71 percent. Britain's FTSE 100 rose 2.13 percent, Germany's DAX index rose 1.02 percent, and France's CAC-40 rose 1.69 percent.
European equity markets looked past a pared-back forecast for annual economic growth on Tuesday. The European Commission cut its growth estimate to 2.5 percent from 2.6 percent, saying the region's economy may have peaked as tighter credit conditions raise the risk of a global slowdown.
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