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Stocks Edge Higher After Bernanke Comments

Tuesday, 08 Jun 2010 10:02 AM

 

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Stocks crept higher in early trading Tuesday following reassurances from Federal Reserve chairman Ben Bernanke that the domestic economy is recovering.

Bernanke's comments come after another late-day plunge Monday sent the Dow Jones industrial average to its lowest level in seven months.

Sharp swings over the final hour of trading have become the norm in the market over the past month as investors remain concerned about what news might come out of Europe overnight about ongoing debt problems. The end-of-day moves are similar to the ones seen in late 2008 during the height of the credit crisis when investors feared holding onto stocks overnight.

Bernanke said late Monday that he didn't expect the U.S. economy to fall back into a second recession, which is reassuring after Friday's disappointing employment report. It also stems some worries that a slowdown in Europe will spread across the Atlantic.

Bernanke said European leaders were taking the right steps to control rising deficits, but that wasn't enough to satisfy worried traders overseas. Major European indexes fell again Tuesday after Fitch Ratings warned that the United Kingdom is facing "formidable" fiscal challenges.

The euro is slightly higher, a day after touching a new four-year low. The euro rose to $1.1944.

The European Union hammered out new oversight measures aimed at heading off debt problems early among member countries. The EU's credibility has been called into question in recent months as countries like Greece, Spain, and Portugal grapple with ballooning debt and try to implement austerity measures.

That has drained confidence from the euro, the currency used by 16 European countries. The euro has dropped nearly 12 percent since the beginning of May.

Ongoing uncertainty about Europe's health and the pace of a domestic recovery sent investors back into some safe-haven alternatives to stocks and the euro. Gold rose to a record high of $1,254.50 an ounce early Tuesday, before pulling back to $1,243.70 an ounce. Gains early Tuesday in stocks and the euro pulled some investors away from gold after it touched a new high.

In early morning trading, the Dow rose 41.72, or 0.4 percent, to 9,858.59. The Standard & Poor's 500 index rose 5.53, or 0.5 percent, to 1,056.00, while the Nasdaq composite index rose 7.81, or 0.4 percent, to 2,181.71.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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