US stocks turn higher on Bernanke remarks

NEW YORK -- Wall Street turned higher Wednesday after Federal Reserve Chairman Ben Bernanke said he didn't expect any more investment banks to suffer the same damage from the credit crisis as Bear Stearns Cos. did.

Bernanke, testifying before Congress, said he doesn't anticipate a repeat of the situation that had Bear Stearns coming close to collapse last month because of too many investments in extremely risky mortgage-backed securities. Bear Stearns ran into severe liquidity problems and had to be bailed out by the Fed and JPMorgan Chase & Co., which is now in the process of buying the troubled investment bank.

The Fed chairman's comments turned stock trading around from an earlier loss. Stocks had fallen at the opening after Bernanke said the economy may contract in the first half of this year -- a trend that would mean the U.S. is in a recesssion.

The credit crisis and the weak economy have both sent stocks tumbling over the past six months, but a new sense of optimism sent stocks hurtling higher on Tuesday, the first day of the second quarter. It was clear from Wednesday's trading that the credit crisis is a more serious concern on Wall Street.

In mid-morning trading, the Dow Jones industrial average was up 22.31, or 0.18 percent, at 12,676.67 after rising nearly 400 points on Tuesday.

The broader Standard & Poor's 500 index was up 4.74, or 0.35 percnet, at 1,374.92, while the Nasdaq composite index rose 13.62, or 0.58 percent, to 2,376.37.

(Agencies)