This morning we were seeing the markets in the red, but they were given a bit of relief following Fed Chaiman Ben Bernanke’s testimony to Congress today.
Ironically, it was Bernanke himself that had initially put the markets into the red when he stated that there was a decent chance that the U.S. economy would contract during the first half of this year. With all the recession rumors and fears floating around these days, his comments earlier were enough to spook the markets into an early sell off.
Luckily, Bernanke testified in front of Congress that we should not expect to see any additional financial institutions collapsing the way we saw Bear Stearns go down last month. After hitting a massive liquidity crisis, Bear Stearns was forced to look for help, and was bailed out by the Federal Reserve, and JP Morgan which is in the process of finalizing its purchase of the company.
It is no secret that the past 6 months have been tough on Wall Street. The credit crunch, weak dollar, and collapsing real estate market have taken their toll, but we are starting to see some signs that traders are beginning to bet that the worst has come and gone. How long the recent rebound will last (if at all) remains to be seen.
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