Transcript for Bernanke Boost: Stocks Surge on Stimulus
This is a special report from ABC news. -- -- -- -- There it is closing bell for this Thursday July 10. -- -- hello everyone anti Hernandez in New York stocks across all three major indices rose today with the Dow finishing at a new record high -- may 28 high. At -- that -- fears it would slow down its purchases of US bonds. -- now and today. 15100461. And now we're joined by Yahoo! finance senior columnist Mike cent toll Mike another nice. Spike in another record day had Bernanke's words about continuing to buy bonds and keeping interest rates let me think that's what this is all about. Yeah that's the immediate catalyst and was out last night's event that Bernanke basically said. For the foreseeable future which have a feeling is gonna become kind of a catch phrase. The Central Bank will remain very accommodative left rates very low money very. Generously available so I think what's happened last -- a week week and a half. Is that investors academy -- peace with the idea that while the Federal Reserve is kind of looking toward that moment. When it's going to slow down what it's doing in terms of buying assets every month. It's not really there yet and it will depend on the economy getting better and I think that's reassuring idea that the -- not supposedly going to you know leave the economy in the lurch. And and sort of back away before it's pretty -- job. It's clear that the economy some better footing. So they're spending 85 billion dollars a month to keep the -- market in the economy propped up but obviously at some point. This is gonna go -- -- -- causing more trouble in the long term. -- potentially -- -- you know the trouble is kind of hypothetical at this point we really don't know this is really Canada a real life experiment that not just the Federal Reserve and other central banks are kind of performing right now. The 85 billion a month what it definitely has done is compress. Longer term interest rates like those that drive mortgages. Now those rates started to pop up a little bit from their lows of may so now we have -- two point 62 point 7% on the ten year treasury yield. That actually is extremely low but it's up a lot in a short period of time the Fed doesn't want it to become kind of a snowball effect where rates just continue. To shoot higher before really the economy can handle -- so yes it will cause problems and -- towards just not doing. As much good as they would hold. Relative to -- The -- and mortgage rates are creeping up as well today at the thirty year mortgage hit a two year high. Can expect that to come down with the -- assurances. Not directly know I mean that's all gonna depend on whether the the yield on those ten year treasury notes does come down at all and probably soccer come down enough that -- you know threatening the lows in mortgage rates have earlier this year so it seems to me we've probably seen the ultimate lows. In borrowing rates for consumers but. I don't really think that these current levels near 4% little more than 4% on a thirty year fixed. That you're going to really compromised the affordability of housing just yet so that's the -- the Fed does not want to see rates spike higher in eight in a rushed way. Because it would jeopardize that housing recovery in the overall economic recovery. Ben Bernanke also said last night that the unemployment rate is actually higher than the stats might indicator we at a point where the markets. Can really tell us about the economy to a larger economy. You know they can -- debt that was actually a -- on Bernanke's part -- to essentially say look. I hear you hunt to investors I hear you that the economy does not feel extremely strong. That may be statistically. It even looks big he looks better through the statistics that infected feels to a lot of folks so I do think that was another way if his saying no we're gonna be sure that what the economy's going to be better before we do -- -- So -- IA I essentially is the feel like he's willing to shoes. The nerves of of the markets here and make sure that he doesn't undermine his own project as he'd probably prepares to leave in January. With with. Kind of unnerving the market in a way that makes. Rates go higher -- obviously the stock market. -- -- -- record high today. What's the general consensus are -- -- keeps seeing -- strong market heading into the next few weeks that at least. You know it's it's actually very difficult to say because I do think what what Bernanke has done is said look. The market's gonna do at this point as well as the economic numbers tell us so another words you can't just be about the fact it has to actually be proven out. By corporate dot earnings which are going to be coming -- -- a big way starting next week. And essentially if they actually performed beyond expectations yet the market can be well supported. But it really is gonna required I think we're gonna be surfing from economic data point to economic data point. For the next few months simply because it -- as low. Rates for ever is no longer and the reason to keep bidding up stocks of the basically the economy has to perform better. For the the market to continue to. -- right Yahoo!'s Mike Santelli thank you so much for joining us and take one last look at the -- before we go again. Another record at fifteen for sixty has -- Bernanke assures investors that the Fed will keep rates down on tax -- in New York thanks for joining us. This has been a special report from the.
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