Exchange traded funds tracking U.S. stocks and gold rallied Friday after Federal Reserve Chairman Ben Bernanke said the Fed will take an extra day at its September meeting to consider additional support for the economy.
Bernanke didn’t announce any immediate easing measures from the central bank.
The Fed “has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said in a speech.
The Fed meeting in September has been extended to two days from one. The Federal Open Market Committee “will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability,” Bernanke said.
The Fed chief also seemed to appeal to Congress for help on fixing the economy.
“Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery,” Bernanke said. Most of the economic policies that support robust economic growth “in the long run are outside the province of the central bank,” he added.
“Economic policymakers face a range of difficult decisions, relating to both the short-run and long-run challenges we face. I have no doubt, however, that those challenges can be met, and that the fundamental strengths of our economy will ultimately reassert themselves. The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability,” Bernanke concluded.
SPDR S&P 500 (NYSEArca: SPY) and SPDR Gold Shares (NYSEArca: GLD) were both up more than 1%.
ETFs have seen volume rise during the recent market turbulence. [ETF Trading Volume Spikes with Volatility]
Bernanke’s speech was at the Kansas City Fed Symposium in Jackson Hole.
“The Federal Reserve remains in the spotlight, with many observers wondering what, if anything, Fed officials can do to help promote economic growth,” said BlackRock strategists in a report this week.
“To start, it is important to remember that the Fed has already done quite a bit — it’s announcement that interest rates will remain at a near-zero level for the next couple of years was a dramatic statement and one that many would classify as a de-facto form of easing,” said BlackRock, which manages the iShares ETFs.
The Fed has promised to keep its target interest rate for overnight loans at record lows until mid-2013.
iShares S&P 500 (NYSEArca: IVV)
Full disclosure: Tom Lydon’s clients own GLD and SPY.