NEW YORK (Reuters) ? Wall Street posted its first weekly gain in more than a month as Fed Chairman Ben Bernanke raised hopes for more stimulus for the economy at the U.S. central bank's September meeting.
Initially stocks fell after Bernanke stopped short of describing detailed plans to strengthen the ailing economy. But the market turned higher, led by technology shares, as investors concluded the Fed was leaving the door open for action even though many traders believe it has limited power to pull the economy out of a rut.
The CBOE Volatility Index or VIX (.VIX), Wall Street's "fear gauge," retreated after days of uncertainty on what Bernanke would say. The VIX slid 10.2 percent to 35.69, after earlier falling as much as 14 percent to a session low at 34.33.
"He didn't give the market the green light for QE3. He also didn't give the market the red light for QE3," said Kevin Caron, market strategist at Stifel, Nicolaus in Florham Park, New Jersey, referring to a possible third round of quantitative easing.
"By implying that inflation is viewed as not a concern, it leaves the possibility for something down the road," he said.
The Dow Jones industrial average (.DJI) ended up 134.72 points, or 1.21 percent, at 11,284.54. The Standard & Poor's 500 Index (.SPX) was up 17.53 points, or 1.51 percent, at 1,176.80. The Nasdaq Composite Index (.IXIC) was up 60.22 points, or 2.49 percent, at 2,479.85.
For the week, the Dow rose 4.3 percent, the S&P gained 4.7 percent and the Nasdaq rose 5.9 percent.
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 as staying low.
Shares of property insurers were mixed after falling earlier in the week on worries that severe damage from Hurricane Irene would result in substantial claims.
Travelers Cos Inc (TRV.N) edged up 0.6 percent to $48.29 after earlier hitting a two-year low. Allstate (ALL.N) was up 0.1 percent at $24.45, having also hit a two-year low. Insurers typically fall before severe weather events and rally later.
Chubb Corp (CB.N) gained 1.2 percent to $59.38.
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.
NYSE Euronext (NYX.N) said the New York Stock Exchange plans to open for trading as usual next week, but because of the possibility of flooding, a decision will not be made until Saturday or Sunday.
Technology stocks led the advance, with Cisco Systems Inc (CSCO.O), Microsoft Corp (MSFT.O) and Intel Corp (INTC.O) among the Dow's top gainers.
Cisco shares rose 1.6 percent to $15.32, while Microsoft shares added 2.8 percent to $25.25, and Intel Corp advanced 1.8 percent to $19.77.
The S&P information technology index (.GSPT) shot up 2.3 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 selloff, 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 (TIF.N) rose 9.3 percent to $69.01 after it raised its full-year profit outlook.
About 7.9 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, matching the year-to-date average of 7.9 billion.
On the New York Stock Exchange, advancers beat decliners by a ratio of about 5 to 1. On Nasdaq, about 4 shares rose for every 1 that fell.
(Additional reporting by Ashley Lau, Editing by Kenneth Barry)
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