The financial markets had pinned their hopes early this week on some new announcement by the Fed chairman, Ben S. Bernanke, at a symposium in Jackson Hole, Wyo., and rose for three straight days. But expectations began to wane by Thursday, and indexes closed more than 1 percent lower.
By the time Mr. Bernanke spoke Friday morning, offering no additional measures to bolster short-term growth, investors had already priced in the result, and stocks recovered.
The Standard Poor’s 500-stock index was up 1.5 percent, or 17.53 points, at 1,176.80. The Dow Jones industrial average was up 1.2 percent, or 134.72 points, at 11,284.54, and the Nasdaq rose 2.5 percent to 2,479.85.
“It was a bit of a nonevent,” said Schwab’s chief investment strategist, Liz Ann Sonders, referring to the impact of the speech.
While Mr. Bernanke “did not close the door to anything,” she said, it appeared that the Fed wanted to give itself more time to assess the economy. “They continue to say they expect growth to pick up in the second half of the year. At least that is a non-negative.” Friday’s five-day gain lifted the markets out of a streak of weekly losses, and the volatility receded slightly on Friday.
The S. P. and the Dow closed off the week with a gain of more than 4 percent, while the Nasdaq rose nearly 6 percent in the period. But all three indexes are still down in the month to date.
The VIX, an index used to gauge volatility, ended at 35.59, the second-lowest reading on the index this week. Analysts said that while new stimulus or specific measures were not in the cards on Friday, the speech itself ended whatever guesswork still remained in the markets and restored some certainty.
“I think the market is continuing to bounce in a range,” said Paul Ballew, Nationwide’s chief economist. “I think the market early in the week got a little worked up that he would do something and then came to their senses.”
The Fed chairman made his standard announcement that the Fed would take any steps necessary to help the economy, and he said the issue would be discussed at the next meeting of the Fed’s policy-making board, in late September. But he made no mention of the measures the Fed might take, something he has provided on several occasions earlier this year. Nigel Gault, the chief United States economist for IHS Global Insight, said the initial equity market reaction to the Fed statement was negative since there was no mention of new action, but the market probably turned around in the hope that action would still come in September. “Unfortunately, the Fed doesn’t have any rabbits to pull out of the hat to magically re-ignite economic growth,” said Mr. Gault.
Mr. Bernanke also said the political battle this summer over the federal government’s borrowing and spending had disrupted financial markets “and probably the economy as well,” and that the country would be well served by a better process for making fiscal decisions.
Mr. Ballew said that comments on the fiscal policy decision-making were more of a “wish than a reality” and so had little apparent impact on the markets.
Still, there were other factors at work on the markets on Friday. Technology shares pulled up the broader market, and on the Nasdaq, Aruba Network rose about 20 percent to $20.55. It reported on Thursday that fiscal fourth-quarter revenue was up 47 percent year over year, and the company said it was confident it would increase market share in the 2012 fiscal year.
Aside from corporate results, there were economic data points to contend with. After taking in disappointing jobs data on Thursday, the markets heard that gross domestic product for the second quarter rose at an annual rate of 1.0 percent, a downward revision in the Commerce Department’s report, of a previous estimate of 1.3 percent. Economists had expected growth to be revised down to 1.1 percent. In the first quarter, the economy advanced just 0.4 percent.
Clark Yingst, the chief market analyst at Joseph Gunnar, said the markets had already sent out signals before the speech that investors did not appear to be expecting anything new, but he also said they could be reacting to the new G.D.P. number. Stocks and the dollar were lower, and gold firmed slightly.
“The slight weakness in the dollar might be a knee-jerk reaction to that,” Mr. Yingst said of the new data. Gold, which is typically a safe-haven asset, has been declining in recent days as many analysts said it was overpriced. On Friday Comex futures rose to $1,822 an ounce.
The Treasury’s benchmark 10-year note rose 13/32, to 99 14/32, and the yield fell to 2.19 percent from 2.23 percent late Thursday.
Article source: http://feeds.nytimes.com/click.phdo?i=9eeab646294f320096b4220d93804716
Speak Your Mind
You must be logged in to post a comment.