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Stocks have a hit wall since the dour economic warning from Ben Bernanke earlier this week, and the Fed chairman may be one who has to get the market to the other side.
A rally that took the major averages up more than 25 percent since October has fizzled over the past two weeks in part because of an unfettered rise in gasoline prices as well as general concerns that the economic recovery may have seen its biggest advances.
The 3 percent economic growththe government reported Thursday for 2011's fourth quarter is likely to represent the high-water mark for gross domestic product well into 2013, according to most economic forecasts.
So when Bernanke said in well-publicized remarks on Monday that he worries that the employment picture will be muddied going forward, it gave impetus to the notion that the central bank will have no choice but to step in with more stimulus.
"The recent data points to the potential for a plateau in economic activity, which has been clearly flagged by fourth-quarter GDP data exhibiting signs of a lack of substance behind a spurt in output," says Andrew Wilkinson, chief economic strategist at Miller Tabak in New York.
"It won’t take many days of stock market selling and a slide to 2 percent on benchmark yields before investors figure out just how much the economy needs ongoing stimulus from the central bank," he adds.
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