Bush, Bernanke remarks boost stocks

NEW YORK — Wall Street closed out another erratic week with a big gain today after investors took comments from President Bush and Federal Reserve Chairman Ben Bernanke as reassuring signs that Wall Street won't be left to deal with problems in the mortgage and credit markets on its own.

The Dow Jones industrial average rose 119.01 to 13,357.74.

Microsoft, one of the 30 Dow stocks, gained 28 cents today to close at $28.73 a share, but was off 0.2 percent for the week. Boeing, also a Dow stock, fell 15 cents to $96.70, and was down 1.8 percent for the week.

Broader stock indicators also rose today. The Standard & Poor's 500 index was up 16.35 to 1,473.99, and the Nasdaq composite index rose 31.06 to 2,596.36.

Investors balked early in today's session when comments from Bernanke didn't indicate a cut in the benchmark federal-funds rate was imminent. However, they moved past some of their initial disappointment and appeared to concentrate on comments that the Fed would step in if needed.

Bernanke, speaking at the Fed's annual conference in Jackson Hole, Wyo., said the central bank will "act as needed" to prevent the credit crisis from hurting the national economy.

The major indexes fluctuated but by midday extended their gains after President Bush spoke about details of a plan to help borrowers facing trouble paying their mortgages.

"You've got all the speeches working for the market here," said Michael Church, portfolio manager at Church Capital Management in Philadelphia. "What we've seen in the last few weeks is that Ben Bernanke and the Federal Reserve are paying attention to what's going on. They will help correct the credit markets. For now, we're in a trading range and we have to sort through this mess."

Since the stock market started tumbling in late July on fears that problems in mortgage and corporate lending would lead to a credit freeze and hurt the economy, the Fed has injected tens of billions of dollars into the banking system and lowered its discount rate — the charge on its loans to commercial banks. But the Fed hasn't yet said it will lower the benchmark federal-funds target rate, and Wall Street's uncertainty over what the central bank will do next has kept the markets volatile. The Fed's next meeting is Sept. 18, and some investors had expected the central bank might hint at or even go through with a rate cut before then.

Economic news, as Bernanke indicated today, appeared less relevant than normal as investors remained focused on upheaval in the credit market and mortgage concerns.

The Commerce Department reported on personal income and spending and the core personal consumption expenditures (PCE) deflator, one of the Fed's preferred gauges of inflation. Personal incomes and spending edged up by 0.5 percent and 0.3 percent, respectively, and year-over-year core PCE stayed at 1.9 percent — within the Fed's comfort range.

The Commerce Department also said orders to factories jumped by 3.7 percent in July, topping expectations for a 3.3 percent increase. The rise, which came after three months of modest gains, followed an 11 percent jump in demand for transportation goods, including the biggest increase in orders for cars in more than four years.

Also, the Chicago purchasing managers index rose to 53.8 in August from 53.4 in July; the index, which measures manufacturing in the Midwest, is seen as a precursor to the Institute for Supply Management index, to be released Tuesday.

Church said the market was helped by today's economic figures as well as a stronger-than-expected reading on second-quarter gross domestic product released Thursday.

"The consumer has been in the crosshairs of the bears for a while now," he said, referring to concerns that a pullback in consumer spending will upend economic growth. "I think this helps clarify a lot of the situation. The news from the consumer is good."