February 24, 2009
Bernanke told Congress Monday that the recession might end this year, and that regulators aren’t planning to nationalize banks. The news alleviated some of investors’ deepening worries about the economy and the banking system, and the Dow Jones industrial average, coming off its lowest levels since 1997, jumped about 250 points, or 3.5 percent. Other major stock indexes rose about 4 percent.
In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009, but that “there is a reasonable prospect” the recession will end this year. He warned that a recovery will require getting credit and financial markets to operate normally.
The market was also relieved to hear Bernanke say the government has no intention of nationalizing banks. The Fed chief said formally nationalizing them “just isn’t necessary.”
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