Stocks rose on Monday, rebounding from last week’s decline, after Federal Reserve Chairman Ben Bernanke suggested the central bank would continue supportive monetary policies, even as the unemployment rate improves.
Major stock indexes were up more than 1 percent in late morning trade with broad gains across sectors.
The U.S. economy needs to grow more quickly if it is to produce enough jobs to bring down the unemployment rate further, Bernanke told a gathering of the National Association for Business Economics.
“Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies,” he said.
Jim Russell, chief equity strategist at U.S. Bank Wealth Management in Cincinnati, said Bernanke’s comments reinforced investors’ perception that the Fed’s policy would remain accommodative and possibly include further quantitative easing, or QE3.
“The mandate of the Fed regarding unemployment has not been fulfilled, and Bernanke is looking under every rock to responsibly fulfill that portion of the mandate,” Russell said. “He continues to leave QE3 on the table, which will be used on a as-needed basis.”