Stocks jump, dollar fall on Bernanke

Wall Street stocks rebounded on Friday as investors digested Federal Reserve Chairman Ben Bernanke's remarks about the economy and regained hope the door was still open for more monetary stimulus down the road.

Major indexes turned positive after initially extending losses as Bernanke failed to offer any concrete action for monetary easing in a speech at a central bank conference in Jackson Hole, Wyoming.

"He didn't give the market the green light for QE3 -- he also didn't give the market the red light for QE3. By implying that inflation is viewed as not a concern, it leaves the possibility for something down the road," said Kevin Caron, market strategist at Stifel, Nicolaus in Florham Park, New Jersey, referring to the Fed's quantitative easing program.

Bernanke also said the central bank's policy panel would meet for two days in September instead of the usual one to discuss any more stimulus. While expressing long-term optimism, Bernanke said the Fed found recent developments troubling, and saw a low inflation rate.

"He did say he expected the rate of inflation to be at or below 2%. That fact sets the stage potentially for more to come from the Fed in the future," Caron said.

On Wall Street, the Dow Jones industrial average was up 140.17 points, or 1.26%, at 11,289.99. The Standard & Poor's 500 Index was up 17.24 points, or 1.49%, at 1,176.51. The Nasdaq Composite Index was up 53.82 points, or 2.22%, at 2,473.45.

The dollar gained on the euro after the speech but later shed those gains, with the euro last up 0.3%.

Hopes for new stimulus helped spark a three-day rally earlier this week, though equities later sold off as expectations moderated.

Technology stocks led the advance, with Cisco Systems Inc, Microsoft Corp and Intel Corp the top three gainers on the Dow.

Cisco shares were up 2.9% at USD 15.51, while Microsoft shares rose 3% to USD 25.32 and Intel Corp put on 2.1% to USD 19.82.

The S&P information technology index was up 2.5%, the best-performing sector on the S&P.

"We're very oversold, so we're getting some bounces," said Lance Roberts, chief executive of Streettalk Advisors, an investment management firm in Houston.

Shares of property insurers rose after falling on worries about damage from Hurricane Irene. Travelers Cos Inc rose 0.6% to USD 48.25, while Allstate Corp shares gained 1.3% to USD 24.74, and Chubb Corp climbed 1.8% to USD 59.71.

Tiffany and Co rose 7.7% to USD 67.95 after it raised its full-year profit outlook.

About three stocks rose for every one declining on both the New York Stock Exchange and the Nasdaq.

Wall street prepares for Irene

Wall Street scrambled to raise cash in case Hurricane Irene causes major disruption in trading for thousands of traders who live in the New York, New Jersey and Connecticut.

The repurchase market, a major source of cash for Wall Street to fund trades and operations, showed an increase in interest rates on loans that mature on Monday, a sign markets are worried there could be disruptions - however temporary - as a result of the hurricane.

Interest rates on loans backed by Treasury bonds that expire on Monday rose by several hundredths of a percentage point from late Thursday to about 0.08% in the USD 1.6 trillion repurchase market.

In the U.S. Treasury market, benchmark 10-year Treasury notes were trading 13/32 higher in price to yield 2.19%, down from 2.21% late on Thursday.

"I think that seeing Treasuries come off a little bit here, you're seeing some bets being unwound in the market," said Rich Bryant, a Treasury trader at MF Global Securities in New York.

"There were some bets in the market that there was an outside chance that something more concrete could be announced today," he said.

Gold was higher, fueled by safe-haven buying. Spot gold was up 0.8% at USD 1,782.99 an ounce.