Wall Street jumps as Fed boss hints at stimulus US stocks were on the rise on Friday after Federal Reserve boss Ben Bernanke made his strongest case yet for new stimulus measures as new weak data piled new worries over the economy.
The blue-chip Dow Jones Industrial Average was up 18.39 points (0.17 per cent) to 11,112.96 points in opening trades, and the broader S&P 500 index was up 4.05 points (0.35 per cent) at 1,177.86 points.
The tech-rich Nasdaq composite index rose 19.57 points (0.80 per cent) to 2,454.95 on the back of Google's strong quarterly earnings, posted after the market closed Thursday.
Fed chairman Bernanke said shortly before markets opened that the central bank was ready to ramp up extraordinary measures to prime the economy amid sky-high unemployment and the risk of crippling deflation.
The Fed was "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with our mandate."
He said that the current inflation and employment rates were too low and raised the specter of deflation which would spell a debilitating spiral of lower prices and wages that would send firms to the wall.
"The risk of deflation is higher than desirable," he said.
Bernanke's comments would likey raise already elevated expectations that the Fed is ready to pump billions into the financial system, in what is known as quantitative easing.
"All in all, Bernanke's speech offered little new information and the Fed appears committed to another round of quantitative easing," said analyst Frederic Dickson of DA Davidson & Co.
Data released by the Labor Department before the market opend showed that the US consumer prices increased a scant 0.1 per cent in September, half the rate expected by most analysts and raising new fears of deflation.
The rise in the consumer price index, widely considered the main indicator on inflation, was due to an increase in food and gasoline prices, the department said.
Excluding food and energy, the so-called "core" index for all items remained flat for the second straight month, while analysts had forecast a 0.1 per cent rise.
On a more positive note, the Commerce Department said US retail sales jumped 0.6 per cent in September, topping expectations in the third monthly gain in a row.
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