Stocks squeezed out modest gains in choppy trading Wednesday, following comments from Fed Chairman Ben Bernanke that monetary policy will remain highly accommodative even as the central bank could start to scale back its bond buying later this year.
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"U.S. equities have recouped their Spring swoon as a litany of Fed governors' pronouncements have on balance calmed fears QE tapering might begin before the U.S. recovery is strong enough to handle it," according to Alec Young, global equity strategist at S&P Capital IQ. "This more dovish Fed perception, coupled with a recent softening in economic news flow has hit bond yields and the greenback, while emerging market stocks have finally caught a bid—outperforming the S&P by 2.6 percent since July 10—as carry trade unwinding has eased. Turning back to the U.S., second-quarter beats will now need to take the lead in fueling stocks, as we think a more dovish Fed is now priced into a very overbought market."