Stocks rise as Bernanke backs economic stimulus

The market turned higher after Bernanke said that "continued accommodative policy" is needed to support the economy's recovery. Stock futures jumped after his comments, suggesting investors believe further stimulus is on the horizon. Bernanke warned of the effects of long-term employment, saying policymakers must monitor whether structural or cyclical factors are pushing up unemployment. <!--EndofExcerptMarker-->

"If progress in reducing unemployment is too slow, the long-term unemployed will see their skills and labor force attachment atrophy further, possibly converting a cyclical problem into a structural one," he explained.

"The distinction may seem academic to some, but to the chairman, the choice of 'continued' as opposed to 'additional' is quite important," noted Dan Greenhaus, the chief global strategist with BTIG, in response to Bernanke. "It seems likely that the chairman is favoring perhaps extending Operation Twist to ensure that the duration of the Fed's balance sheet remains constant rather than any new purchase program."

The week is fairly full in terms of economic reports, with investors getting data on the housing market and a look at consumer confidence and personal spending levels later in the week. The National Association of Realtors reported that pending home sales fell 0.5% in February. Economists were expecting a rise to 1%, according to Thomson Reuters. However, sales are still solidly higher than a year ago, and economists expect improvements in buying as in spring.

The Chicago Federal Reserve reported that its national activity index, which weighs production, income, employment, personal consumption and more, fell to minus 0.09 in February, from 0.33 in January, which was its highest level since May 2010.

A manufacturing survey from the Dallas Federal Reserve held steady in March, suggesting that growth in Texas factory activity is continuing at the same pace as in February. New orders stagnated, but expectations of manufacturers on future business conditions were more optimistic.