Federal Reserve Chairman Ben S. Bernankesaid accommodative monetary policy is still needed to spur jobs.
Bank of America Corp. (BAC) and Dell Inc. (DELL) advanced at least 1.4 percent to pace gains among the largest companies. Lions Gate Entertainment Corp. (LGF) surged 4.3 percent as “The Hunger Games” collected $155 million in weekend sales in the U.S. and Canada, a record for the month of March.
S&P 500 futures expiring in June added 0.6 percent to 1,402.60 at 8:45 a.m. New York time. Dow Jones Industrial Average futures rose 80 points, or 0.6 percent, to 13,112. Equities extended gains after Bernanke said that while he’s encouraged by the unemployment rate’s decline to 8.3 percent, the economy still needs help.
The drop in unemployment may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” Bernanke said in a speech today in Arlington, Virginia. “To the extent that this reversal has been completed, 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.”
Futures also rose as Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March (SPX) 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall.
The improvement in the labor market since last fall may only be a reversal of large layoffs during the recession, and further improvement may depend on faster economic growth, said Federal Reserve Board Chairman Ben Bernanke on Monday. “We cannot yet be sure that the recent pace of improvement in the labor market will be sustained,” Bernanke said in a speech to the National Association for Business Economics. The Fed chairman said that weak demand is the primary factor behind the weak labor market, and not structural issues like lack of skills, As a result, the Fed’s current ultra-low interest rate policy can help, he said. “What will lead to more hiring and, consequently, further declines in unemployment? The short answer is more-rapid economic growth,” Bernanke said.
Dow futures are up 83 points, while S&P 500 futures gain 9 points. U.S. stock futures traded around the flat line prior to Bernanke’s speech.
Euro spikes against the dollar, gold and silver rise, oil edges up and Treasurys move off session lows. The only loser this morning is the U.S. dollar.
The market is clearly interpreting today’s speech as evidence that a third round of quantative easing, or QE3, remains a serious option in the Fed’s arsenal.
Pending home sales index, Dallas Fed manufacturing survey, 4-week bill announcement, 3-month bill auction, 6-month bill auction
ICSC-Goldman Store Sales, Redbook, S&P Case-Shiller home-price index, consumer confidence, Richmond Fed manufacturing index, 4-week bill auction, 2-year note auction
MBA purchase applications, durable goods orders, EIA petroleum status report, 5-year note auction
Fourth quarter GDP (third reading), jobless claims, EIA natural gas report, Kansas City Fed manufacturing index, 3-month bill announcement, 6-month bill announcement, 52-week bill announcement, 7-year note auction
Personal income, Chicago PMI, consumer sentiment
Christopher & Banks
Robbins & Myers
Family Dollar Stores
Research In Motion
SORL Auto Parts
Nothing of note