Market Talk

Bulls continue to have the most muscle

US stocks finish another strong week on a strong note, as an afternoon flourish carries the Dow Industrials to their highest close in a year.

Trading was generally uneventful for most of the session, with IBM and Chevron buttressing the Dow’s gains. Buyers get a bit more busy during the final hour to get the DJIA over the hump, but volume’s unimpressive.

IBM rises 3%, and contributes more than one-third of the average’s gain. Chips logged scorching gains; health-care, financials also strong.

DJIA rises 78.07 points to 9864.94, and Nasdaq Comp adds 15.35 to 2139.28. S&P 500 rises 6.01 to 1071.49. Continue reading…

Bernanke's doing a lotta talking, but when will he take action?

Hot off the presses: Fed chairman Ben Bernanke says the central bank will raise rates when the economy recovers.

Revelation? Not quite. Across The Curve blogger John Jansen said it best: “I wonder who would have been so obtuse as to think otherwise?”

Key issue, of course, is timing – when will the Fed decide a rate-hike is warranted? We’re not any closer to figuring that out (and probably neither is the Fed.)

For now, however, the mere mention of increasing rates at some distant point is enough to give the US dollar a much needed boost.

Still, don’t expect the Fed to boost rates until after unemployment peaks, despite recent Fedspeak from Bernanke and other policy makers, Calculated Risk predicts. In the early 1990s, the Fed waited more than a year and a half after the jobless rate peaked before raising rates. And after unemployment peaked in 2003, the Fed waited a year to boost rates.

Unemployment’s expected to keep rising into 2010, which has Calculated Risk believing the Fed won’t raise rates until late 2010 at the earliest, and more likely sometime in 2011. Waiting for the economy to “improve sufficiently,” as Bernanke puts it, likely means the Fed will wait for a meaningful decline in unemployment, blog adds.

Continue reading…

Premarket US stock futures signal a flat to slightly negative bias for markets when regular trading kicks off in two hours.

Movement in the US dollar has had a large influence on market direction lately, with stocks and commodities (like oil and gold) tacking with Blue Angel-like precision in the opposite direction from the buck. No sign of that changing anytime soon.

Bernanke spoke last night about tightening monetary policy “when the economic has improved sufficiently.” No telling when that will be, but its mere mention is enough to help the dollar a bit. August trade deficit due at 8:30am.

S&P futures down about a point; 10-yr lower, yield at 3.27%.