Spring Break
Stocks up as Bernake offers assessment of economy
Tim Paradis - Associated Press
Issue date: 2/24/09 Section: News
NEW YORK - Federal Reserve Chairman Ben Bernanke has reassured Wall Street by telling Congress the recession might end this year.
In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009. But he also said "there is a reasonable prospect" the recession will end this year. He warned that a recovery will require getting credit and financial markets to operate normally.
While Bernanke's assessment of the economy helped ease some pressure on the market, it also came after days of heavy selling that left the Dow Jones industrial average and the Standard & Poor's 500 index near 12-year lows, so a bounce in stocks wasn't a surprise. Stocks made cheaper by the selloff attracted bargain-hunting traders. Also, some, better-than-expected quarterly numbers from Home Depot Inc. helped cool some anxiety about the economy.
Stocks were also up ahead of a speech by President Barack Obama. Beaten-down financial shares gained as investors hoped for better insight into the government's plans to aid the industry which is struggling with bad debt.
The White House said Tuesday that Obama will provide more details about his plans to help stabilize the financial system. He is also expected to make the case that more has to be done to revive the economy. The speech is scheduled for 9 p.m. EST.
The continued focus on the stability of the financial system comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation's banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday they could convert the government's stock in the banks from preferred shares to common shares.
Investors are hoping Obama's speech will give them a better sense of how the government will proceed in its efforts to alleviate the effects of a recession now in its 14th month.
In mid afternoon trading, the Dow rose 151.81, or 2.1 percent, to 7,266.59. On Monday, the major indexes tumbled more than 3 percent, including the Dow, which fell 251 points. It was the lowest close for the blue chips since May 7, 1997.
In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009. But he also said "there is a reasonable prospect" the recession will end this year. He warned that a recovery will require getting credit and financial markets to operate normally.
While Bernanke's assessment of the economy helped ease some pressure on the market, it also came after days of heavy selling that left the Dow Jones industrial average and the Standard & Poor's 500 index near 12-year lows, so a bounce in stocks wasn't a surprise. Stocks made cheaper by the selloff attracted bargain-hunting traders. Also, some, better-than-expected quarterly numbers from Home Depot Inc. helped cool some anxiety about the economy.
Stocks were also up ahead of a speech by President Barack Obama. Beaten-down financial shares gained as investors hoped for better insight into the government's plans to aid the industry which is struggling with bad debt.
The White House said Tuesday that Obama will provide more details about his plans to help stabilize the financial system. He is also expected to make the case that more has to be done to revive the economy. The speech is scheduled for 9 p.m. EST.
The continued focus on the stability of the financial system comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation's banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday they could convert the government's stock in the banks from preferred shares to common shares.
Investors are hoping Obama's speech will give them a better sense of how the government will proceed in its efforts to alleviate the effects of a recession now in its 14th month.
In mid afternoon trading, the Dow rose 151.81, or 2.1 percent, to 7,266.59. On Monday, the major indexes tumbled more than 3 percent, including the Dow, which fell 251 points. It was the lowest close for the blue chips since May 7, 1997.
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