Friday, Aug 31, 2012

--Stocks higher after Fed Chairman Ben Bernanke's speech

--Bernanke hints at possibility for more action, but offers no concrete steps

--Facebook falls to all-time lows after BofA/Merrill pares enthusiasm for shares 


 
   By Chris Dieterich

New York--Major stock benchmarks rose in choppy trading after Federal Reserve Chairman Ben Bernanke hinted that the central bank stands ready to boost the economy, but offered little clear indication of the Fed's next steps.

The Dow Jones Industrial Average rose 90 points, or 0.7%, to 13092. The blue-chip benchmark was about 100 points higher before the speech, dropped about 70 points, and again bounded higher.

The Standard & Poor's 500-stock index advanced seven points, or 0.5%, to 1407, and the Nasdaq Composite rose nine points, or 0.3%, to 3059.

In his speech, Mr. Bernanke expressed dissatisfaction with the economic outlook and repeated the central bank's policy statement that "the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery."

The market appeared to be "interpreting the speech as a repeat of what's been said in [Federal Open Market Committee] statements and in previous comments. It's a reiteration that the Fed stands at the ready if need be," said Quincy Krosby, market strategist at Prudential Financial.

"Leading up this meeting, there was more and more of a consensus that Bernanke was not going to use this venue to announce major policy move," Ms. Krosby said.

Fed watchers next look to the meeting of the Fed's policy-making committee in the middle of next month for more concrete signs of action. Investors have been awaiting the speech all week, speculating over whether the Fed chief will hint at further stimulus measures, which have boosted stocks in the past. Mr. Bernanke signaled a second round of the Fed's bond-buying program, known as "quantitative easing," two years ago in Jackson Hole.

A flurry of economic reports hit the tape around the time of Mr. Bernanke's speech. The purchasing manager's index for the Chicago region in August declined slightly from the month earlier, in line with expectations. A final reading of the Reuters/University of Michigan consumer sentiment index for August topped estimates. Separately, factory orders registered the biggest jump in a year last month.

Growth-sensitive energy and materials sectors led nine of the S&P 500's 10 sectors higher. Only defensive-oriented utility stocks declined. Intel surged 2.3% to lead all 30 Dow components higher.

Facebook fell 4.1% to a new all-time low after analysts at Bank of America Merrill Lynch cut their view on the stock's future price to $23, citing the likelihood for market pressure as shares held by insiders and employees become eligible to trade.

European markets ticked broadly higher, with the Stoxx Europe 600 rising 0.2%. European Central Bank board member Benoit Coeure was reiterated the ECB's commitment to preserve the euro currency, the latest show of support from the Continent's central bankers. The ranks of the unemployed in the euro zone rose to 18 million in July, the highest number since data were first compiled for the region in January 1995.

Asian markets were mostly weaker, led by the 1.6% drop in Japan's Nikkei Stock Average after data showing industrial production in the country declined 1.2% in July compared with expectations of a 1.8% monthly rise. China's Shanghai Composite slipped 0.3% to close at a three-and-a-half-year low.

Crude-oil futures rose 1.3% to $96.85 a barrel, while gold futures tacked on 0.6% to $1,667 a troy ounce. The dollar fell against the euro and against the yen. Yields on benchmark 10-year Treasury bonds fell to 1.60% as demand rose.

In corporate news, Splunk climbed 16% after the data-analysis software company reported a narrower-than-expected fiscal second-quarter loss on revenue that topped forecasts, and provided an upbeat sales outlook for the current quarter.

Zumiez dropped 8.1% after the teen-apparel retailer reported August same-store sales that were below analyst expectations and provided a fiscal third-quarter earnings outlook that was below current forecasts.

OmniVision Technologies gained 4.6% after the semiconductor maker reported fiscal first-quarter revenue and provided a current-quarter outlook that were well above analyst expectations.

-Write to Chris Dieterich at christopher.dieterich@dowjones.com

(END) Dow Jones Newswires

August 31, 2012 10:47 ET (14:47 GMT)