Investing Blog

Finance Blogs » Investing Blog » Why did Bernanke move markets?

Why did Bernanke move markets?

By Sheyna Steiner ·
Friday, August 26, 2011
Posted: 2 pm ET

Stocks jumped this morning following the speech by Federal Reserve Chairman Ben Bernanke.

The Dow Jones Industrial Average initially dropped 131.04 as the speech began but by noon was up 3.3 percent.

The Standard & Poor's 500 index followed the same trend, dropping initially but rallying until noon, up 3.7 percent from the day's low.

Some reports attribute the rise to global relief that QE3 is not on the way -- at least not at this time. The Fed chairman did leave the door open for further stimulus should economic conditions warrant.

With all the rampant speculation about another round of easing from the Fed, it seems counterintuitive that the markets would be up today rather than down.

According to a story on, "U.S. stocks gain in wake of Bernanke," jumping in with both guns blazing could have convinced the markets that things did indeed look grim. As it was, by not indicating that there will be more stimulus, Bernanke signaled that the U.S. economy is not doing badly enough to warrant that sort of action.

The story quotes Keith Springer, president of Springer Financial Advisors as saying, "More stimulus would have riled investors into thinking that things are actually worse than we see."

Conversely, as more easing was not ruled out, on the website for the Financial Times,, Robin Harding reports that markets may be banking on further quantitative easing down the road.

"Investors initially reacted poorly to the speech but took heart at the possibility of further Fed action," he wrote in "Bernanke hints at more Fed support."

Get more CD and Investing News with our free weekly newsletter.

Follow me on Twitter.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.