NEW YORK — Comments from Fed Chairman Ben Bernanke set off a stock-market rally early Wednesday, but it wasn’t long before another Fed official helped cut it short.
In testimony before Congress, Bernanke said the central bank would be open to new economic-stimulus measures but only if the economy gets much worse. The remarks were far from a promise for more Fed action, but markets reacted immediately nonetheless. The Dow Jones industrial average jumped as many as 164 points, or 1.3 percent.
Most of those gains evaporated later in the day after Federal Reserve Bank of Dallas president Richard Fisher said in a speech that the Fed had already “pressed the limits of monetary policy.” The Dow ended the day up 44.73, or 0.4 percent, at 12,491.61.
The Standard & Poor’s 500 index rose 4.08, or 0.3 percent, to close at 1,317.72. The Nasdaq composite rose 15.01, or 0.5 percent, to 2,796.92. The indexes had fallen over the previous three days.
Stocks also took a hit in the afternoon when House Speaker John Boehner called into question whether lawmakers would agree to raise the government’s borrowing limit by an Aug. 2 deadline. Failure to meet the deadline could result in a U.S. debt default, which would have disastrous effects for the economy and financial markets.
Boehner, a Republican, said that dealing with Democrats on the issue has been like “dealing with Jell-O.”
Bernanke spelled out specific steps the Fed might consider if the economy gets worse, including another round of bond purchases. He also detailed what the Fed would do should the economy improve.
Signs of healthy growth in China also helped push stocks higher. The Chinese government reported that the country’s economy grew at a slower but still-healthy rate of 9.5 percent last quarter. China is attempting to rein in its speeding expansion and ease inflation, but a sudden drop-off in growth could hurt the U.S. economy by cutting into demand for U.S. exports.
Markets also rose because fears abated that Italy would default on its debt. The S&P 500 fell 2.9 percent over the past three days as traders worried one or more European countries would fail to pay their debts, causing a global slowdown in lending.
