Global stocks, oil, euro up after Bernanke economy view
By Wanfeng Zhou
NEW YORK (Reuters) - World stocks and oil prices rose in choppy trade on Tuesday after a gloomy economic outlook by Federal Reserve Chairman Ben Bernanke kept alive views that the U.S. central bank may take further steps to stimulate growth.
Shares and oil had come under pressure earlier in the session, while the U.S. dollar rallied after Bernanke dampened hopes the Fed was moving closer to a third round of bond buying to bolster flagging growth.
But markets reversed course as reactions to Bernanke's testimony before Congress changed. Analysts said the Fed chief's comments on the economy, especially on the jobs market, suggested the central bank was leaving the door open for further monetary stimulus.
Bernanke said policymakers would consider a range of tools to further stimulate growth if it became clear the labor market was not improving or if deflation risks mounted.
"We do expect the Fed to launch QE3 possibly by as early as August," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York. "The only game in town to revive or raise GDP growth is the Fed."
U.S. stocks closed higher. The Dow Jones industrial average .DJI finished up 78.33 points, or 0.62 percent, at 12,805.54. The S&P 500 Index .SPX ended up 10.03 points, or 0.74 percent, at 1,363.67. The Nasdaq Composite Index .IXIC closed up 13.10 points, or 0.45 percent, at 2,910.04.
Bernanke also told the Senate Banking Committee the U.S. economic recovery was being held back by anxiety over Europe's debt crisis and the path of U.S. fiscal policy. Continued...