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Federal Reserve Chairman Ben Bernanke didn’t do much to drive the market in his Capitol Hill testimony today. But China picked up the slack.
China announced it would be cutting its benchmark lending rate for the first time in nearly four years in an effort to stimulate the stagnating economic growth in the world’s second-largest economy. The move gave investors around the globe a glimmer of hope on an otherwise blasé day, and was enough to boost the Dow Jones Industrial Average for a second straight day.
A day after U.S. financial markets made their biggest one-day jump of the year, the Dow was up another 46 points today, or roughly 0.4%. That brings the index’s two-day gains to more than 300 points.
Other U.S. indexes didn’t follow suit. The S&P 500 was basically flat for the day, while the Nasdaq pulled back a half a percent after three straight days of gains. The Nasdaq was yesterday’s biggest gainer, with a 2.4% leap.
China’s stimulus efforts were viewed as a breath of fresh air amid all the worsening sovereign-debt problems in Europe and the lack of any good news from Ben Bernanke today. Bernanke told Congress about the significant risks the U.S. economy is facing, but he did not indicate that the Fed will be taking any action to boost growth soon.
That could change as early as June 19, when the FOMC holds its next meeting. Bernanke said that the committee will discuss how to address the issue of whether the economy will be strong enough to put a dent in the unemployment rate without another round of quantitative easing, which experts like Bill Gross have insisted is inevitable if real progress is to be made.
Among big-name U.S. companies, Procter & Gamble (NYSE: PG) and Home Depot (NYSE: HD) were two of the day’s biggest movers, though their gains were a relatively modest 1.5%.
Not surprisingly, a couple major China stocks got a boost from the country’s stimulus news. Baidu (Nasdaq: BIDU) gained 2.8%. PetroChina (NYSE: PTR) was up 0.9%.