New York – Stocks rose modestly Wednesday after investors bobbed and weaved with every word of new Federal Reserve Chairman Ben Bernanke’s testimony before Congress.
The market seesawed through Bernanke’s first monetary-policy testimony before the House Financial Services Committee. Stocks fell as he warned of more rate hikes, rose as he reassured investors about the spread between long-term and short- term bond yields, then turned mixed as he expressed concern about federal budget deficits. The major indexes crept upward after his debut ended.
Bernanke said inflation is contained but warned it could tick higher. He left the door open to future interest-rate increases. He was upbeat about the U.S. economy, saying the latest employment and consumer spending news “suggests that the economic expansion remains on track.”
The market has recently been hypersensitive to any hints about future Fed rate hikes, said Brian Gendreau, investment strategist for ING Investment Management. Bernanke’s testimony suggests that “if the Fed is going to err, it will be on the side of more rate hikes,” Gendreau said.
The Dow Jones industrial average rose 30.58, 0.28 percent, to 11,058.97 after rising 136 points Tuesday.
Broader stock indicators were slightly higher. The Standard & Poor’s 500 index rose 4.47, 0.35 percent, to 1,280.00, and the Nasdaq composite index rose 14.26, 0.63 percent, to 2,276.43.
Advancing issues outnumbered declining issues by roughly 2 to 1 on the New York Stock Exchange.
Stocks’ advance was slight because “we had a big move (Tuesday), and we need to digest it,” said Greg Church, chief investment officer of Church Capital Management in Yardley, Pa.
Stocks may sway until it becomes clear when the Fed will stop raising interest rates, said Richard Madigan, global investment strategist at JP Morgan Private Bank.
