Wall Street turned around and rose Thursday after Federal Reserve Chairman Ben Bernanke soothed investors by stating that the central bank is ready to lower interest rates to shore up the economy. The Dow Jones industrial average initially jumped more than 100 points on Bernanke's comments but soon came off its highs, perhaps because investors realize that it will take more than rate cuts to restore the economy's upward momentum. Still, Bernanke's comments reassured a market that fell badly since the start of the year amid growing evidence that the economy is weakening. The Fed chief said the central bank is prepared to act aggressively to rescue a weakening economy. «We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,» he said. Jim Herrick, manager of equity trading at Baird & Co., said, «We're seeing this pop here, but I think it's temporary.» He added that many investors have been betting for some time that the Fed will lower rates by a half-point at their next meeting. «There's still subprime issues. We still have concerns about earnings, and the mortgage market.» Investors were also likely still mindful of a profit warning Thursday from Capital One Financial Corp. The credit card issuer warned that its 2007 profit will fall short of expectations because of increased loan delinquencies and additions to its legal reserves in the fourth quarter. In midday trading, the Dow, which had been down more than 100 points in early trading, rose 68.77, or 0.54 percent, to 12,804.08. Broader stock indicators rose after Bernanke's comments but also backtracked. The Standard & Poor's 500 index rose 2.54, or 0.18 percent, to 1,411.67, and the Nasdaq composite index fell 3.06, or 0.12 percent, to 2,471.49. Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 828.6 million shares. Bond prices showed little movement following Bernanke's comments. The yield on the benchmark 10-year Treasury note, which moves opposite its price, stood unchanged at 3.83 percent from late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
