Wall Street rose sharply Tuesday as investors, cheered at least momentarily by a decline in the trade deficit and gains in overseas stocks, awaited a speech by Federal Reserve Chairman Ben Bernanke. The Dow Jones industrial average rose nearly 100 points, according to AP. Market participants will be listening closely for clues about rate policy when Bernanke speaks to the German central bank, the Bundesbank, in Germany at 11 a.m. EDT (1500 GMT). Wall Street all but expects the Fed to cut its benchmark federal funds rate at a meeting Sept. 18 after more than a year without change; the debate has largely shifted to a question of by how much, and for how long a loosening campaign could last. Late Monday, Fed Governor Frederic Mishkin said the Fed must weigh many factors in deciding monetary policy, including the risk to the broader economy posed by a housing slump and financial market volatility, according to Dow Jones Newswires. The U.S. stock market has been volatile since midsummer, with jitters high about the sluggish housing market and debt aversion causing a standstill in the credit markets and damaging the economy. Last Friday's jobs report, which showed the first monthly payrolls decline in four years, aggravated those concerns. Mark Zandi, chief economist at Moody's Economy.com, predicted the risk of a recession in the next six to 12 months has increased to nearly 40 percent from less than 15 percent before subprime concerns began riling the markets. Investors nervous about the U.S. economy slipping into recession got a bit of relief from the Commerce Department's report on the U.S. trade deficit. The trade gap narrowed modestly in July to $59.2 billion (¤42.82 billion) from $59.4 billion (¤42.97 billion) in June, thanks to record exports of farm goods, autos and other products. Many economists had anticipated a widening in the deficit. The Dow rose 99.17, or 0.76 percent, to 13,227.02. Broader stock indexes also gained. The Standard & Poor's 500 index rose 9.86, or 0.68 percent, to 1,461.56, and the Nasdaq composite index rose 19.65, or 0.77 percent, to 2,578.76. Bonds fell as stocks rose, pushing the 10-year Treasury note's yield up to 4.35 percent from 4.27 percent late Monday. The dollar weakened against the euro and British pound, while gold moved higher. Crude oil and gasoline futures edged higher as traders waited for news from the Vienna meeting of the Organization for Petroleum Exporting Countries. It was expected that OPEC would keep current output targets in place, although Saudi Arabia has been said to be pushing for a production increase. In corporate news, ImClone Systems Inc. and Bristol-Myers Squibb Co. said the drug Erbitux improved the survival rate of lung cancer patients in a late-stage study.
