Markets end strong as Bernanke urges second stimulus

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By Sean Lengell

UPDATED:

Trading on Wall Street surged Monday, as the Dow Jones shot up 413 points after Federal Reserve Chairman Ben Bernanke called for an additional federal economic stimulus package --a plan gaining acceptance by the White House.

U.S. stocks were higher in early afternoon trading, and prices for government debt and the dollar also rose. European markets also rose as banks there took advantage of government lifelines and credit markets began to thaw.

The Dow rose 413.21, or 4.67 percent, to 9,265.43. Broader indexes also rose sharply, as the Standard & Poor's 500 index jumped 44.85, or 4.77 percent, to 985.40, and the Nasdaq composite index rose 58.74, or 3.43 percent, to 1,770.03.

Mr. Bernanke told the House Budget Committee Monday morning that with a protracted economic slowdown a likely possibility, another congressional economic stimulus package would be appropriate.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Mr. Bernanke said at a House Budget Committee hearing Monday morning.

Mr. Bernanke's comments -- the first time the central bank chairman had explicitly endorsed a second stimulus package --were applauded by Democratic leaders on Capitol Hill.

"Chairman Bernanke added his voice to the chorus of economists, experts and policymakers who insist that America needs a job-creating recovery package to get our economy back on track and to restore consumer and investor confidence," said House Speaker Nancy Pelosi, California Democrat.

Added Senate Majority Leader Harry Reid, Nevada Democrat; "Given the serious economic problems we face, much more must be done to revive our economy and strengthen the middle class."

Democrats have said they would consider including unemployment benefit extensions and other spending measures in a second stimulus package.