Stocks Stage Hollow Bounce As Volume Declines

Stocks took a whiffle-ball bounce Wednesday, rising in light trade after Fed chief Ben Bernanke reiterated a pledge to keep interest rates low.

The Nasdaq and the S&P 500 led, up 1% each. The Dow took a 0.9% gain and the NYSE composite climbed 0.8%.

Volume remained soft on both major exchanges.

While the market's bounce looked good in terms of price performance, the lack of volume was disappointing. It showed the market continuing its attempted rally in mostly light volume.

The behavior is a signal to hold on to your cash and avoid buying stocks for the time being. Even if a stock has the right pedigree and a good breakout, the market has yet to make a follow-through rally confirmation.

Still, the market showed some resilience Wednesday, rising despite the midmorning news that new home sales fell for a third straight month in January, off 11%, to a record low.

Bernanke told a congressional panel that the Federal Reserve planned to keep interest rates low for "an extended period."

The dollar also had an impact. It pulled back after a bounce on Tuesday. That helped boost oil $1, to just below $80 a barrel. Gold rose less than 1% to near its recent resistance around $1,100 an ounce.

Earnings news stirred much of the day's other action.

U.S. Stocks Bounce Back, But Volume Lags

5:15 p.m. Update: Stocks rose for the first time in three sessions Wednesday, as Federal Reserve Chairman Ben Bernanke pledged to keep interest rates low for an "extended period" of time.

The Nasdaq climbed 1%, closing back above its 50-day moving average by a narrow margin. The S&P 500 also gained 1%, but finished slightly below its 50-day line. Meanwhile, the Dow and NYSE composite rose 0.9% and 0.8%, respectively.

Volume fell on both exchanges, mitigating the comeback.