US Federal Reserve Chairman Ben Bernanke's testimony to Congress provided little in the way of new details about plans to stimulate the pace of recovery. Even so, investors took solace in Bernanke's comments that policy makers were ready to act if needed.
The Fed chairman cited the euro-area fiscal and banking crisis, and the US fiscal situation as the two main sources of risk to economic growth.
The lack of enough new jobs remains a key source of concern, which means "the reduction in the unemployment rate seems likely to be frustratingly slow," Bernanke said in his semi-annual testimony today to the Senate Banking Committee in Washington.
Stimulus might come in the form of additional bond purchases, Bernanke said, citing both Treasury debt and mortgage-backed securities. Other options include lending through the Fed's emergency loan window and reducing the rate the Fed pays banks on reserves held at the central bank.
"If the economy is weakening it means [Bernanke] will probably come back to the table. He hasn't spent that bullet yet and until he does, the markets are probably going to hold up," Bruce Bittles, chief investment strategist at Robert W Baird & Co in Nashville, told Reuters.
