Wall Street was on track to end the week higher on Friday after four weeks of losses, as a speech by Federal Reserve Chairman Ben Bernanke raised hope the Fed could consider further stimulus measures for the economy at an extended policy meeting in September.
Initially stocks fell after Bernanke stopped short of detailing plans to strengthen the ailing economy. But the market turned higher shortly after as investors surmised the Fed was leaving the door open for action.
The CBOE Volatility Index or VIX <.VIX>, Wall Street's so-called fear gauge, pulled back down after soaring in the past week. The VIX slid 7.8 percent to 36.65, after earlier falling as much as 13.7 percent to a session low at 34.33.
What he said was sort of right in line with what is reasonable, but things might change by the September meeting and the market is looking forward to that, said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
The Dow Jones industrial average <.DJI> was up 63.08 points, or 0.57 percent, at 11,212.90. The Standard & Poor's 500 Index <.SPX> was up 9.57 points, or 0.83 percent, at 1,168.84. The Nasdaq Composite Index <.IXIC> was up 45.49 points, or 1.88 percent, at 2,465.12.
Bernanke, speaking in Jackson Hole, Wyoming, said the central bank's policy panel would meet for two days in September instead of the scheduled one-day meeting to discuss any more stimulus.
While expressing long-term optimism, Bernanke said the Fed found recent developments troubling and saw a low inflation rate.
Shares of property insurers rose after falling on worries about damage from Hurricane Irene. Travelers Cos Inc
As Irene bore down on North Carolina, tens of thousands of people evacuated and East Coast cities, including New York, braced for a weekend hit from the powerful storm.
Technology stocks led the advance, with Cisco Systems Inc
Cisco shares rose 1.1 percent to $15.25, while Microsoft shares added 2.5 percent to $25.18, and Intel Corp advanced 1.5 percent to $19.72.
The S&P information technology index <.GSPT> shot up 1.8 percent, making it the S&P 500's best-performing sector.
It's a pretty broad market rally right now, but tech has been really hammered in the sell-off, so you see that leading the rally, said Gary Wedbush, head of trading at regional investment bank Wedbush Morgan in Los Angeles.
Tiffany and Co
(Reporting by Angela Moon; Editing by Jan Paschal)