Stock prices on the New York exchanges climb higher after Federal Reserve chairman Ben Bernanke told Congress the economic recovery is continuing.
AP Photo/J. Scott Applewhite
Stocks climbed Wednesday after Federal Reserve Chairman Ben Bernanke said debt problems in Europe might only amount to a "modest" drag on the U.S. economy if the financial markets can halt their slide.
Bernanke's comments came in testimony to the House Budget Committee. He said the economy is still recovering but that jobs and housing are likely to remain weak.
The market had been rising ahead of Bernanke's remarks in part because the euro climbed back above $1.20. The move past that psychological level was a sign of increasing confidence in Europe's ability to contain its debt problems.
Traders have been anxious since last month about the health of Europe's economy. Governments across Europe are planning deep spending cuts to reduce debt. The worry is that lower spending there will slow down an economic recovery in Europe, which in turn could put a drag on other regions. Major stock indexes have fallen into a "correction," which is a drop of more than 10 percent from their recent highs.
Investors found some optimism in a news report that China is expected to post better-than-forecast export data later this week. That is driving hopes that Europe's debt problems won't derail strength in Asia.
In economic news, the government reported that inventories at wholesalers grew for a fourth month in April, while sales posted a 13th straight increase. Wholesale inventories increased 0.4 percent, while sales rose 0.7 percent. The gains were essentially in line with analysts' expectations. Investors hope improved demand will prompt businesses to increase orders and help revive the economy.
In midmorning trading, the Dow Jones industrial average rose 38.70, or 0.4 percent, to 9,978.68. The Standard & Poor's 500 index rose 4.29, or 0.4 percent, to 1,066.29, while the Nasdaq composite index rose 8.35, or 0.4 percent, to 2,178.92.