Stock Futures Rise as Bernanke Signals Accommodation
NEW YORK ( TheStreet) -- Stock futures were rising Wednesday as Federal Reserve Chairman Ben Bernanke took an accommodative tone on monetary policy in a pre-released comment that he is scheduled to deliver to a Congressional committee later this morning.
Investor sentiment was additionally bolstered after Bank of America
Bernanke, in prepared remarks, emphasized that while the Fed is poised to continue to help stimulate the U.S. economy, the central bank may change tactics if the recovery's pace quickens.
"Because our asset purchases depend on economic and financial developments, they are by no means on a preset course," Bernanke said in a speech sent to news reporters.
The Fed chairman explained that if economic conditions improve faster than expected and inflation appears to be rising decisively upward, the pace of asset purchases could be reduced more quickly and tapering could begin later this year. However, if the outlook for employment were to become relatively less favorable and inflation didn't appear to be moving back towards 2%, the current pace of purchases could be maintained for longer.
"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 that in addition, even after purchases end, the Federal Reserve will be holding its stock of Treasury and mortgage-backed securities off the market and reinvesting the proceeds from maturing securities, which will continue to put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
Futures for the S&P 500 were rising 6.5 points, or 7.09 points above fair value, to 1,677.75. Futures for the Dow Jones Industrial Average were up 32 points, or 42.15 points above fair value, to 15,423. Futures for the Nasdaq were up 9.5 points, or 9.48 points above fair value, to 3,080.25.
The benchmark 10-year Treasury was rising 14/32, diluting the yield to 2.485%.The dollar was rising 0.16% to $82.63 according to the U.S. dollar index .
Fed Chairman Ben Bernanke begins his two-day semi-annual monetary policy and economic report before Congress on Wednesday at 10 a.m. EDT, starting with testimony before the House Financial Services Committee in Washington and followed by his speech before the Senate Banking Committee on Thursday.
His appearance will be followed at 2 p.m. by the release of the Fed's July Beige Book report detailing anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts.
Bank of America