US stocks rally on Bernanke comments
Published: 26th Mar 2012 23:25:46
US stocks finished higher after Federal Reserve chairman Ben Bernanke hinted the US central bank would keep in place its supportive monetary policy.
Speaking to economists in Virginia, he said the job market remained weak despite three months of strong hiring.
The Fed needed to "remain cautious", he said, which many analysts took as a sign that interest rates would stay at record lows until 2014.
The S&P 500 climbed 1.4% to 1,416.51, its highest close since May 2008.
The Dow Jones rose 1.2%, while the tech-heavy Nasdaq gained 1.8% to close at 3,122.57, its best finish since November 2000.
Earlier, European markets had also closed higher.
The US economy has added an average of 245,000 jobs a month from December to February, and the unemployment rate has fallen to 8.3% from 9.2% in June last year.
But Mr Bernanke said: "Despite the recent improvement, the job market remains far from normal. The number of people working and total hours worked are still significantly below pre-crisis peaks."
The Fed is also concerned that the recovery in the US could falter. The economy grew at an annualised rate of just 3% in the fourth quarter of 2011, and economists believe growth may have slowed to an annual pace of about 2% in the first quarter of 2012.
Robert Dye, chief economist at Comerica Bank in Dallas, said the central bank may even take further steps to boost the economy, such as launch another round of asset purchasing.
"The chairman is very much keeping additional monetary policy options on the table," Mr Dye said.
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Harvard CitationBBC News, 2012. US stocks rally on Bernanke comments [Online] (Updated 26th Mar 2012)
Available at: http://www.ukwirednews.com/news/1418854/US-stocks-rally-on-Bernanke-comments [Accessed 21st Apr 2014]
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