After two hours of choppy trading, shares in American International Group (AIG 1.34%) are up 0.2%, buoyed by the soothing words of Federal Reserve chairman Ben Bernanke and better-than-expected jobs data.
This just in
Yesterday, Bernanke gave testimony before the House Committee on Financial Services on U.S. monetary policy, and today he'll do the same before the Senate banking committee.
Most investors are focused on the fate of quantitative easing, and to that effect, he said that while the central bank remains committed to tapering QE this year, it absolutely depends on how well the economy is doing, and stressed that unemployment and inflation are not where they should be.
Also moving the needle today is news from the Department of Labor that initial claims for jobless benefits were 334,000, down 24,000 from the week previous, and easily beating economists' expectations of 340,000.
Foolish bottom line
Investors love the idea of easy money flowing into the economy. And whether four years of QE has had any real effect on the economy doesn't really matter; investors think it has. By not backing down on the plan to potentially taper QE later this year, while at the same time assuring the market that the Fed will not abandon the economy, Bernanke is trying to have his cake and eat it too. And it seems to be working.
The Dow Jones Industrial Average and the S&P 500 all hit fresh highs today, and the Big Four banks are all booming. In recent weeks, "good" economic news -- like a positive jobs report -- has dragged markets down, as investors feared the start of QE tapering. Now, Bernanke's comments and positive jobs news are combining on a big day for the markets.
Unless, of course, Bernanke says something in his testimony to the Senate today that somehow spooks them again. This is always possible, which is why here at The Motley Fool, we stress investing for the long term: tuning out market noise and tuning into the fundamentals of the companies you're invested in. So leave the daily ticker checks to the day traders, and train your sights far down the road: Your portfolio will thank you, even if your broker won't.
