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By Jennifer Yousfi
U.S. markets soared yesterday (Monday) after U.S. Federal Reserve Chairman Ben S. Bernanke endorsed another domestic stimulus package, sending the Dow Jones Industrial Average to its first close above 9,000 in four consecutive trading sessions.
At the close in New York, the blue-chip Dow had gained 413.21 points (4.67%) to close at 9,265.43. The tech-laden Nasdaq Composite Index jumped 58.74 points (3.43%) to close at 1,770.03. And the broader-based S&P 500 Index racked up a 44.85-point (4.77%) gain to close at 985.40.
In testimony before the House Budget Committee yesterday, Bernanke said that due to the poor economic outlook, additional government assistance could be needed.
"Any fiscal action inevitably involves tradeoffs" that may "burden future generations," said Bernanke, Bloomberg News reported. Yet "with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate."
In February, the federal government approved a $168 billion stimulus package that sent checks to qualified taxpayers. The checks, which were mailed through May, were largely responsible for surprisingly strong gross domestic product (GDP) growth in the second quarter. But the economic boost in GDP has now passed and some legislators feel additional action is needed.
"Effectively, the Fed chairman is giving Congress a green light to go ahead with an additional fiscal stimulus package," Brian Bethune, chief U.S. financial economist for research firm Global Insight, told CNNMoney.com.
House Speaker Nancy Pelosi, D-Calif., has been one of the most vocal proponents of a new stimulus package.
"Chairman Bernanke made it clear that a new economic recovery package is critical to boost our weakening economy,"
News and Related Story Links:
- Bloomberg News:
Bernanke Backs More Stimulus, Citing 'Weak' Outlook
Bernanke: It's time for stimulus plan
Stocks gain as Bernanke supports more stimulus
- Money Morning:
2Q GDP Buoyed by Exports and Rebate Checks