What Brought The Market Off Its Lows

Markets have come well off their lows on two developments: 1) a rally in financials, which have brought stocks like Citigroup from positive to negative territory, and 2) a notable move down in oil, which has brought down energy stocks but rallied the overall market. GM, for example, has moved from a low of $8.81 to nearly $10, and up 6 percent.

The two most significant financial stocks of the moment--Fannie Maeand Freddie Mac, both remaining down but are also well off their lows.

Still, this is still a weak day, with three stocks declining for each advancing.

Among many issues, Mr. Bernanke addressed the widely held belief that speculators are somehow to blame for the recent runup in commodity prices. While acknowledging that investor interest in commodities has increased, he noted that if speculators really were pushing prices up beyond which supply and demand would dictate, inventories of oil should be increasing, but we are seeing the opposite: inventory levels are down. He also noted that many commodities, like iron ore, that are not traded on futures markets, have had very large increases in prices, so the evidence for manipulation is "very weak."

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