It was all about Ben Bernanke today, as investors anxiously listened to the Federal Reserve chairman testify on Capitol Hill. His words initially sent stocks spiraling down mid-morning, as markets interpreted his ambiguousness as a sign that no more federal stimulus would be coming in the near term. It seems investors had a rapid change of heart, however, as stocks suddenly turned higher around 11 a.m. ET and remained in the green for the rest of the day. At the close, the Dow Jones Industrial Average
Bernanke acknowledged obvious economic concerns including Europe's debt crisis, the oncoming "fiscal cliff," and stubborn employment numbers. The big question remains how to interpret Bernanke's statement that the Fed is prepared to "take further action as appropriate to promote a stronger economic recovery."
Today's rapid market swing is a clear demonstration of how emotional investors can send the market reeling or skyrocketing on small rumors. However, the long-term situation, that the Fed will provide stimulus only if the economy worsens to a point where quantitative easing is necessary, remains unchanged. As a long-term investor with a Foolish outlook, events like this should not affect your investing decisions.
Turning to individual stocks, business-services company R.R. Donnelley & Sons
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Foolish intern Charlie Kannel owns no shares of the companies mentioned above. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and Pfizer and creating a diagonal call position in Johnson & Johnson. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.