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NEW YORK (AP) -- Traders are eagerly awaiting indications from Federal Reserve chairman Ben Bernanke that interest rate hikes aren't likely anytime soon.
The hope that Bernanke will make that clear in remarks scheduled for Tuesday afternoon is keeping stocks afloat. Stocks recovered some of their losses Tuesday after sliding for four straight days.
The Dow Jones industrial average rose 53 points, or 0.4 percent, to 12,142 in midday trading. The Standard & Poor's 500 index rose 5, or 0.4 percent, to 1,291. The Nasdaq composite rose 6, or 0.2 percent, to 2,708.
The Fed has said it will wind down its $600 billion bond-buying program later this month. But a string of disappointing economic reports in recent weeks has renewed speculation that the Fed might extend the program or delay any increase in interest rates well into next year. Before the latest indications that the economy was losing momentum, economists widely expected the Fed to begin raising rates as soon as the end of this year to head off inflation. Bernanke is scheduled to speak at the International Monetary Conference at 3:45 p.m.
"The markets are now thinking there's going to be a little bit of a positive jolt from Bernanke," said Rob Lutts, president of Cabot Money Management. "He is the key market participant that has the impact to make people excited and give the market a little more medicine."
Stocks were also boosted by traders reacting to a technical milestone. The S&P 500 fell 14 points Monday. That brought the index down to 5 percent below its April 29 peak. A five percent drop from the peak is a key signal to buy for many traders, said Lutts.
"A lot of people look at a 5 percent correction as a time to make some kind of change," said Lutts. "Some say it's a time of weakness and they should get out, but some say it's the time to get in." He added that Hedge Funds like it when markets are volatile because they can exploit short-term stock dips for gains.
Banks recovered some of their recent losses. JPMorgan Chase & Co. rose 1.6 percent to $41.19 and Bank of America Corp. rose 0.5 percent to $10.88. Bank stocks took a hit Monday after a Federal Reserve board member indicated in a speech that banks might have to increase the amount of money they keep on hand to cover potential losses.
A contentious acquisition proposal ratcheted up the stock price of all companies involved.
International Paper Co. rose 1.2 percent after smaller rival Temple-Inland fought back against International Paper's hostile takeover bid for $3.3 billion in cash. Temple-Inland also soared 40 percent on the news. Weyerhouser co. rose 6 percent, the most of any company in the S&P 500, possibly on suspicion it was another takeover candidate for International Paper.
Cablevision Systems Corp. rose 5.7 percent after the New York-area cable company set a date when it would spin off its cable networks. The company plans to divest popular television networks including AMC, which broadcasts the popular "Mad Men" show on June 16. Investors prefer the sleeker broadcast networks like WE TV, IFC and the Sundance Channel operating on their own to the current unwieldy corporate structure.
Traders had some economic news to consider, too. The Labor Department reported that businesses had fewer job openings in April. The government said that employers posted 3 million ads for jobs in April, down from 3.1 million in March. The figure added to the stack of other signs that the U.S. is having an employment crisis. However, the report did little to change the direction of stocks.
Oil prices fell toward $98 a barrel ahead of an OPEC meeting that could result in higher oil production. Rising oil prices have contributed to the recent stock sell-off. Oil has hovered around $100 a barrel since March. On Wednesday ministers from the 12 countries that make up the oil cartel OPEC will consider raising output levels. Producing more oil could ease the pressure on prices.
Did the traders had some economic news to consider, too?
A. TRUE
B. FALSE
On Wednesday are the ministers from the 12 countries that make up the oil cartel OPEC will consider raising output levels.
A. TRUE
B. FALSE
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