Stocks rise on Wall Street after China cuts rate

NEW YORK (AP) ? Stocks on Wall Street got a boost Thursday from China's efforts to spur its economy. Highly anticipated testimony from Federal Reserve Chairman Ben Bernanke turned out to be a nonevent.

The Dow Jones industrial average was up 115 points at 12,529 just after 1:30 p.m. EDT.

The Dow had been up as much as 140 points, but stocks lost a little ground after Bernanke gave no signal of any immediate further action by the Fed to help the economy.

China cut its benchmark lending rate for the first time in nearly four years, adding to efforts to reverse a sharp slowdown in economic growth there. It was the first rate cut in China since November 2008.

Matthew Kaufler, portfolio manager at mutual fund group Federated Investors, said the rate cut gave the U.S. market a "shot of adrenalin."

"China is the world's economic locomotive at the moment, and it can't afford to slow down at a time when other major economies are in precarious positions," he said.

China has been a major engine of global economic growth over the past few years as the U.S. has sputtered and a debt crisis has spread in Europe.

Industrial stocks that rely heavily on the Chinese market for sales were among the biggest gainers on the New York Stock Exchange. Heavy equipment maker Caterpillar rose 2 percent to $88.18.

The Standard & Poor's 500 index was up nine points at 1,324, and the Nasdaq composite index was up 11 points at 2,855.

Bernanke, testifying before the congressional Joint Economic Committee, said that the Fed remains ready to act if the economy needs it, but he didn't say any additional steps were on the way.

"As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," Bernanke said.

The price of gold, which since 2009 has often surged as the Fed has bought bonds to stimulate the economy, was down almost 3 percent Thursday after Bernanke's testimony. Gold was off $45 an ounce at $1,588.

Some traders had hoped for more from Bernanke after Dennis Lockhart, the president of the Fed's Atlanta bank, said Wednesday that sustained weakness in job creation could justify more action to support the economic recovery.

Lockhart's comments helped fuel the biggest gain of the year for U.S. stocks, including a 286-point leap in the Dow.

But Bernanke's performance Thursday was "anticlimactic," said Charles Bobrinskoy, vice chairman and director of research at Ariel Investments. "He was mildly negative about the economy but not enough for any action now."

A bleaker view of the economy has taken hold in recent weeks, especially as hiring has weakened. U.S. employers added just 69,000 jobs in May, the fewest in a year.

Investors will now wait to see what the Fed says when it concludes its next policy meeting June 20.

Bernanke "wasn't in a position to say much except leave the door open for later," said Michelle Girard, senior U.S. economist with Royal Bank of Scotland.

Girard said she believes the Fed may extend a program called Operation Twist, in which it sells short-term securities and buys long-term bonds to drive down long-term interest rates, for a few months. It is set to expire at the end of this month.

Investor fear has grown recently that Greece will leave the euro currency union, triggering a financial a panic in Europe and dragging down the rest of the world economy.

Some fear over Europe was allayed Thursday when Spain raised $2.6 billion from the bond market. The interest rate on its benchmark 10-year note fell to 6.02 percent from 6.26 percent late Wednesday in trading on the secondary market, a sign that bond investors have more confidence in Spain's finances.

Among stocks making big moves in the U.S.:

? Pharmacyclics Inc. rose $3.40, or 10 percent, to $38.18 after an analyst predicted that the company's experimental lymphoma drug could grow into a blockbuster product.

? Molina Healthcare, an insurance company, plunged $7.62, or 30 percent, to $18.14 after it withdrew its 2012 profit forecast, citing a possible revenue shortfall in Texas.

? Men's Wearhouse dropped $6.43, or 18 percent, to $29.91 after reporting disappointing financial results and issuing a weak forecast for its second quarter.

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AP Business Writer Matthew Craft contributed to this report.

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