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Tuesday, February 26, 2013

Bernanke bump: Stocks tend to rally on testimony

Bernanke bump: Stocks tend to rally on testimony $SPY

Expect stocks to finish higher after Federal Reserve Chairman Ben Bernanke gives his semiannual testimony to Congress on Tuesday and Wednesday, if history serves as any guide.
Over the past six years, the S&P 500 Index SPX -1.83%  has finished higher nine out of 12 times during the two-day period over which the Fed chair has answered questions from Congress. By the close of the second day’s testimony, from the close before the first day, the stock index has gained an average 0.5%, a MarketWatch analysis of FactSet data shows. Read more about hawks vs. doves at the Fed going into next week.
Since 2007, the biggest bump to markets during Bernanke’s testimony was Feb. 24-25, 2009, when the S&P 500 rose nearly 3% over the course of the two-day meeting. Then again, the index was dragging its knuckles in the 700s at the time, compared to more than 1500-level as of Friday’s close. The Fed had just cut interest rates to their current near-zero levels that past December, and the first round of quantitative easing measures had started in November. Read more on Bernanke's Feb. 2009 testimony.
The biggest two-day drop, 1.4%, came after the March 1-2, 2011, talk, after Bernanke warned that a violation of the country’s debt ceiling would likely create a new financial crisis and House Republicans criticized QE2. Read more about Bernanke's March 2011 testimony.

S&P 500 before and after 
S&P 500 during Bernanke’s semiannual 
monetary policy report to Congress
TESTIMONY DATES2 DAY S&P 500 CHANGES&P CLOSE BEFORES&P CLOSE AFTER
Feb 14-15, 2007+0.87%1,444.261,456.81
July 18-19, 2007+0.24%1,549.371,553.08
Feb 27-28, 2008-0.99%1,381.291,367.68
July 15-16, 2008+1.39%1,228.31,245.36
Feb 24-25, 2009+2.94%743.33764.9
July 21-22, 2009+0.30%951.13954.07
Feb 24-25, 2010+0.76%1,094.61,102.94
July 21-22,
2010
+0.94%1,083.481,093.67
March 1-2, 2011-1.42%1,327.221,308.44
July 13-14, 2011-0.36%1,313.641,308.87
Feb 29-March 1, 2012+0.14%1,372.181,374.09
July 17-18, 2012+1.41%1,353.641,372.78
Source: FactSet

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