Stocks higher, but volatile, after Bernanke speaks

In this Aug. 3 file photo, traders work on the floor of the New York Stock Exchange. Stocks closed lower Thurs­day with investors too wor­ried about gas prices and unem­ploy­ment to be impressed by news that con­sumer spend­ing is up. (AP Photo/Richard Drew, File)

JOSHUA FREED

AP Busi­ness Writer

It took a while, but investors even­tu­ally decided they liked what they heard from Ben Bernanke, and stock indexes rose enough on Fri­day to put them into pos­i­tive ter­ri­tory for August.

Stocks gyrated after the Fed­eral Reserve chair­man spoke on Fri­day morn­ing. They first gave up their morn­ing gains, then bolted to their highs for the day, before set­tled in-between.

The Dow Jones indus­trial aver­age ended the day up 90.13 points at 13,090.84.

A half-hour after trad­ing began, Bernanke declared that the Fed is ready to take more action to help an econ­omy that’s “far from satisfactory.”

Investors have been watch­ing to see whether the Fed will buy more bonds to fur­ther lower long-term inter­est rates. Stocks fell ini­tially, how­ever, after it became clear that no such announce­ment was com­ing Fri­day and that Bernanke had stopped short of com­mit­ting the Fed to any spe­cific move.

Still, he said the Fed “should not rule out” new poli­cies to improve the job market.

Stocks rebounded once investors parsed his com­ments. At one point the Dow was up as many as 151 points.

In terms of volatil­ity, “it’s been the most action we’ve seen in cou­ple of weeks,” said Ryan Lar­son, a senior equity trader at RBC Global Asset Man­age­ment. He noted that pre-Labor Day vol­ume was light, with many investors and traders on vaca­tion, which can con­tribute to big­ger price swings.

The Stan­dard & Poor’s 500 index closed up by 7.10 points at 1,406.58. The Nas­daq rose 18.25 points to close at 3,066.96.

The Dow fin­ished the month of August up by 0.8 per­cent. The S&P 500 rose more than 2 per­cent for the month, and the Nas­daq rose more than 4 percent.

Investors look­ing for help from the Fed­eral Reserve may only have one more chance before the elec­tion, said Frank Fan­tozzi, CEO of Planned Finan­cial Ser­vices in Cleve­land. The Fed’s policy-making arm meets on Sept. 13. If it doesn’t announce some form of stim­u­lus then, it prob­a­bly won’t until after the elec­tion, he said.

“He’s wait­ing until the last pos­si­ble minute,” Fan­tozzi said of Bernanke. “I think in the next two weeks they’re going to really digest the eco­nomic data and say, ‘Ok, do we get involved or not?’”

Bernanke’s said at a Fed meet­ing in Jack­son Hole, Wyo., that it’s “prob­a­bly not a coin­ci­dence” that stock prices have risen since March 2009, when the Fed first announced its plan to buy Trea­suries and other secu­ri­ties. The Dow is up 77 per­cent since the 2009 announcement.

Bernanke’s com­ments on Fri­day got more uni­form recep­tion in energy mar­kets, which tend to rise on bull­ish signs for the econ­omy. Oil prices jumped $1.81 to $96.43 per bar­rel on the New York Mer­can­tile Exchange. Nat­ural gas and heat­ing oil both rose more than 1 percent.

Stocks rose in nine out of 10 indus­try groups in the S&P 500. Energy stocks and mate­ri­als stocks had the biggest gains, each up 1 per­cent. Util­ity stocks declined slightly.

About 2.9 bil­lion shares traded hands on the New York Stock Exchange, which is less than aver­age but nor­mal for a late-summer week.

Also Fri­day, the Com­merce Depart­ment said fac­tory orders rose 2.8 per­cent in July on surg­ing demand for autos and com­mer­cial planes. How­ever, orders for core cap­i­tal goods — a key mea­sure of invest­ment spend­ing — dropped 4 per­cent. That was that figure’s fourth decline in five months.

Investors seemed more focused on Bernanke’s com­ments and the over­all higher fac­tory orders, though.

Other shares with big moves on Fri­day included:

—Face­book set a new low. Down­grades by ana­lysts pushed it down $1.03, or 5.4 per­cent, to $18.06. Its pre­vi­ous intra­day low was $18.75. Face­book is down 52 per­cent from its $38 ini­tial pub­lic offer­ing price.

— US Air­ways Group Inc., up 2.5 per­cent after dis­clos­ing that it signed a con­fi­den­tial­ity agree­ment that sig­nals the begin­ning of talks with Amer­i­can Air­lines for a pos­si­ble merger.

— Zumiez fell 9.4 per­cent after the spe­cialty sports and cloth­ing retailer said its third-quarter earn­ings would be lower than ana­lysts had expected.

— Sci­ence Appli­ca­tions Inter­na­tional Corp. rose 3.4 per­cent after say­ing it will split at the end of next year into two busi­nesses, with one focus­ing on national secu­rity, engi­neer­ing and health cus­tomers, and another focused on gov­ern­ment customers.

Stocks in Europe were mixed. The Ger­man DAX and the CAC 40 in France both rose about 1 per­cent. The FTSE 100 in Britain fell 0.1 percent.

The dol­lar fell, with the euro ris­ing to $1.258, and the Japan­ese Yen ris­ing against the dol­lar to 78.33.

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