NEW YORK: Leading blue chip shares rallied to a record finish on 14 February 2006 after Federal Reserve chief Ben Bernanke told Congress he foresees “sustainable” economic growth ahead with inflation likely to ease.
The leading blue chip Dow Jones Industrial Average closed up a hefty 87.01 points (0.69 percent) at 12,741.86 on 14 February 2006.
The Nasdaq composite rallied 28.50 points (1.16 percent) to 2,488.38 while the broad-market Standard and Poor’s 500 index ended up a strong 11.04 points (0.76 percent) at 1,455.30.
Stocks shot higher after Bernanke layed out an essentially upbeat view of US economic performance, saying that the world’s largest economy is gaining momentum after a soft patch induced by a housing slump.
Bernanke said the economy “appears to be making a transition from the rapid rate of expansion over the preceding several years to a more sustainable average pace of growth.”
Market optimism was boosted by the Fed chief’s comments.
“It is not exactly fair to say that Bernanke outlined a Goldilocks view, but it certainly was good enough for now,” said Gregory Drahuschak, a market analyst at Janney Montgomery Scott.
Market participants have dubbed economic growth that is not too slow or too hot, the “Goldilocks” effect.
“The market’s interpretation was clear. The Dow moved nicely higher immediately after the release of Bernanke’s formal remarks,” Drahuschak said.