FOX Business: The Power to Prosper
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The blue chips jumped more than 130 points, shedding triple-digit losses, as traders shrugged off economic concerns and initial disappointment over Fed chief Ben Bernanke's high-profile speech.
The Dow Jones Industrial Average climbed 135 points, or 1.2%, to 11,285, the S&P 500 rose 17.5 points, or 1.5%, to 1,177 and the Nasdaq Composite jumped 60.2 points, or 2.5%, to 2,480. The FOX 50 gained 10 points, or 1.2%, to 853.
It has been yet another wild week for Wall Street overall. The Dow tacked on 503 points during the first three days, then tumbled 171 points on Thursday before closing with triple-digit gains on Friday. In total, the blue chips gained 4.3%, the S&P 500 was up 4.7% and the Nasdaq soared 5.9%.
The Dow also traded in nearly a 400 point range on the day, climbing 181 points at the session high, and tumbling 216 points at the low.
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The Nasdaq, with its high concentration of technology companies, performed the best out of the major market averages.
Technology shares like Research in Motion (RIMM) and Cisco (CSCO) were among bright spots on the day. Consumer-driven stocks like Tiffany & Co. (TIF) and industrials such as Caterpillar (CAT) also moved sharply as well.
Utilities, like Consolidated Edison (ED), however, lagged behind the broader markets amid concerns about the impact of Hurricane Irene that is set to slam the Eastern United States.
Bernanke's speech in Jackson Hole on Friday morning sent the markets fluctuating rapidly as traders tried to assess what it would mean for the economy. Recent economic data have shown the global economic recovery has deteriorated substantially, and economists across the board have warned that the chance of dipping back into recession has increased markedly.
Bernanke echoed those comments, saying the recovery is less robust than expected and will take a while. Indeed, the Fed chief said recent data have pointed to persistent economic drags, and not just temporary factors such as the the earthquake and tsunami that slammed Japan in March.
Some market participants expected the central bank to roll out another round of quantitative easing to help strengthen the economy. However, the Fed instead said it plans on meeting for two days instead of one in September to discuss additional monetary policy tools and stands ready to offer additional stimulus as necessary.
At the last Jackson Hole summit in 2010, Bernanke unveiled the broad, and controversial, quantitative easing program referred to as QE2. The purpose of the program was to ease financial conditions by purchasing long-term Treasuries -- a first for the Fed -- and thereby boosting growth. The central bank has had to adopt unconventional monetary policies since short-term interest rates, the tool the Fed generally uses for monetary policy, are already essentially at 0%.
A revised reading on second-quarter economic output showed Gross Domestic Product expanding at an annualized pace of 1%, slower than the 1.1% economists predicted, and below the first reading of 1.3%. Interestingly, while the headline GDP number was revised negatively, some economists see the internal figures as actually pointing to a stronger third-quarter recovery.
"All in all, while [second quarter] was unmistakably very soft, the foundations for a rebound in [the third quarter] now look more encouraging," economists at Barclays Capital wrote in a research note.
The economists noted that weakness was largely concentrated in inventory accumulation, which was offset by stronger consumption and business investment -- both signs of stronger overall demand.
Consumer sentiment ticked slightly higher in late-August, with the Reuters/University of Michigan gauge climbing to 55.7 from a prior reading of 54.9, slightly below estimates of 56. Consumers' view of the economy took a big hit between July and August as the debt debate that raged on in Washington, D.C. for weeks and recent market turmoil. Sentiment is generally seen as a major driver of spending habits, which have a direct impact on the economy, and an even greater affect for retailers like Best Buy (BBY).
Meanwhile, traders were carefully tracking Hurricane Irene, which has the potential to be one of the worst storms to hit New York City on record. Shares of insurers like Travelers (TRV) and Chubb (CB) have dipped amid fears the hurricane will cause widespread damage.
Energy markets were mixed. Light, sweet crude rose 7 cents, or 0.08%, to $85.37 a barrel. Wholesale RBOB gasoline slid 3 cents, or 1.1%, to $2.93 a gallon.
In currencies, the greenback fell 0.57% against a basket of world currencies while the euro gained 0.75% on the dollar.
Gold, which has had a highly-volatile week, jumped $34.30, or 2%, to $1,794 a troy ounce.
Prices at the pump were up slightly overnight. A gallon of regular costs $3.59 on average nationwide, down from $3.70 last month, but well higher than the $2.69 drivers paid last year, according to the AAA Fuel Gauge Report.
Tiffany (TIF) leaped 8% after beating the Street with a 33% increase in second-quarter profits and upgrading its 2011 EPS guidance above expectations. The jewelry retailer posted double-digit sales growth around the world.
The English FTSE 100 fell 0.02% to 5,130, the French CAC 40 slid 1% to 3,088 and the German DAX slipped 0.84% to 5,537.
In Asia, the Japanese Nikkei 225 edged higher by 0.29% to 8,798 and the Chinese Hang Seng fell 0.86% to 19,583.