Stocks finished higher for a second session Wednesday, led by techs, after Bernanke reiterated that the central bank stands ready to inject more stimulus and despite the Fed's latest lackluster "Beige Book" report.
With the day's gains, all three major averages are back in positive territory for July.
The Dow Jones Industrial Average rallied for a second session, jumping 103.16 points, or 0.81 percent, to close at 12,908.70, led by Intel and Cisco .
The S&P 500 added 9.11 points, or 0.67 percent, to end at 1,372.78, failing to close above the 1,374 level, where the index finished on July 3. The tech-heavy Nasdaq climbed 32.56 points, or 1.12 percent, to finish at 2,942.60.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, slid below 16.
Among the key S&P sectors, techs led the gainers, while banks added to losses.
“The market is trying to find a path and direction,” said Kevin Mahn, president and CIO at Hennion & Walsh Asset Management, adding that he expects equities to move sideways for the rest of the year. “There’s no clear direction or conviction from all the economic and earnings data…the recovery is going to be a lot slower and we just have to be patient.”
And some were downright skeptical on the rally.
“There’s no reason for investors to be enamored to buy equities…volume continues to be extremely light and we’re in for a quiet summer,” said Alan Valdes, director of floor operations and VP of trading at DME Securities, citing ongoing issues in Europe and uncertainties over the upcoming elections.
Bernanke testified on monetary policy and the economy for a second day, this time before the House Financial Services Committee, virtually reiterating his presentation to the Senate Banking Committee on Tuesday.
The Fed Chairman said the economy isn't likely to slide back into recessionand sees continued moderate growth. He also added that the central bank will not hesitate to act if needed. (Read More: Further Fed Easing by September?)
"I don't want to imply that we've done everything we can. We may do more in the future," Bernanke said. "It may be possible that we will take additional action if we conclude we are not making progress towards higher levels of employment."
The Fed said the economy expanded at a moderate rate in June and early Julybut the employment market slowed in certain parts of the country, according to the central bank's latest "Beige Book" report.
Meanwhile, Treasury Secretary Timothy Geithner echoed Bernanke's comments, saying the economy is "definitely slower," rejected the idea of another recession. Speaking at the "Delivering Alpha" conference presented by CNBC and Institutional Investor, Geithner defended the Obama administration's actions and said Washington needs to take aggressive action to promote growth.
Bank of America tumbled even after the financial giant reported earnings that beat Wall Street's expectations, becoming the fifth big bank in a row to beat estimates.Fellow financials Goldman Sachs and Citigroup both topped estimates earlier in the week. Rival Morgan Stanley is scheduled to report earnings Thursday.
“The earnings bar has been set so low that even if companies beat, it doesn’t do anything for the market,” said Valdes. “There are too many overriding problems that are making people nervous—you might get a one-day pop, but earnings have not moved the needle at all for equities and that’s going to continue.”
Honeywell International rallied after the conglomerate posted a 12-percent earnings gain, thanks to strong demand in the U.S. trumped weakness in Europe.
Intel topped earnings expectations but the chipmaker forecast weak current-quarter sales, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales. In addition, at least eight brokerages cut their price target on the company. Still, the tech giant was the best performer on the blue-chip index.
Smaller semiconductor rivals AMD and Applied Materials also lowered their guidance in recent weeks.
American Express , IBM, Qualcomm and Ebay are slated to report after the closing bell.
Capitol One is also scheduled to post earnings this afternoon, a day earlier than expected. Separately, the bank agreed to pay $210 million to settle chargesthat it pressured customers to buy extra credit card products.
Vivus soared after the FDA approved the drugmaker's obesity drug. The FDA approved Arena's Belviq a few weeks ago, granting green light to the first long-term weight-loss drug in 13 years.
On the economic front, housing starts rose at its fastest pace in over three years, according to the Commerce Department. And weekly mortgage applications gained last week, thanks to a jump in refinancing demand, according to the Mortgage Bankers Association. (Read More: Housing a Bright Spot in a Dismal Summer)
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: Jobless claims, existing home sales, Philadelphia Fed survey, leading indicators; Earnings from Morgan Stanley, Novartis, Philip Morris, Travelers, Verizon, AutoNation, BB&T, Blackstone, Nokia, Southwest Airlines, Google, Microsoft, AMD, Chipotle, ETrade, Sandisk
FRIDAY: Fender and Kayak trading debut; Earnings from GE, Schlumberger, Xerox
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