Stocks Climb as Bernanke Eases Markets
NEW YORK ( TheStreet) -- U.S. stocks closed higher Wednesday as Federal Reserve Chairman Ben Bernanke reiterated an accommodative tone on monetary policy, easing concern the central bank is seeking to curb the bond-buying stimulus program that has helped boost equity markets for more than 18 months.
The Fed chairman in testimony before the House Financial Services Committee said that if economic conditions improve faster than expected and inflation moves much higher, the bank could reduce asset purchases more quickly and tapering could begin later this year.
Conversely, if the employment outlook were to become relatively less favorable and inflation doesn't moving towards 2%, the current pace of purchases could be maintained for a longer period of time.
"If needed, the Committee would be prepared to employ all of its tools, including an increase in the pace of purchases for a time, to promote a return to maximum employment in a context of price stability,'' Bernanke said.
Markets were generally bolstered after Bank of America
Bank of New York Mellon
Bond yields were collapsing after Bernanke's remarks and amid a spate of downbeat housing market numbers. The benchmark 10-year Treasury was gaining 12/32, diluting the yield to 2.491% back beneath 2.5% where they last traded ahead of Independence Day.
Gold for August delivery at the COMEX division of the New York Mercantile Exchange meanwhile posted a choppy session and settled lower by $12.90 at $1,277.50 an ounce.
Headline housing numbers took on a downbeat tone Wednesday. Housing starts declined to a less than expected seasonally adjusted annual rate of 836,000 in June from an upwardly-revised 928,000 in May, according to the Census Bureau. Economists, on average, were expecting a print of 959,000, according to a Thomson Reuters poll. Building permits fell to a less than expected annual pace of 911,000 from an upwardly-revised 985,000. Economists were expecting an annual pace of 1 million.