US stocks rally on speculation of rate-hike pause

NEW YORK, July 19 (Reuters) U.S. stocks rallied on Wednesday, with major indexes all jumping more than 1 percent, as traders interpreted comments from Federal Reserve Chairman Ben Bernanke as hinting at a possible pause in interest-rate increases.

Bernanke said in testimony prepared for delivery to the Senate Banking Committee the Fed was forecasting cooler economic growth and some moderation in inflation.

At the same time, he said the central bank remained worried about pricey oil and tight labor markets and the risk they might foster expectations for rising prices. Even so, investors interpreted his remarks as positive.

''Bernanke is hinting at a pause in hiking interest rates,'' said Jack Bouroudjian, principal at Brewer Investment Group in Chicago.

''(That's the reason) you are seeing an immediate reaction in the fixed income and equity markets.'' The Dow Jones industrial average was up 110.62 points, or 1.02 percent, at 10,909.85. The Standard&Poor's 500 Index was up 15.28 points, or 1.24 percent, at 1,252.14. The Nasdaq Composite Index was up 23.80 points, or 1.16 percent, at 2,067.02.

Bernanke's comments helped underpin a market already buoyed by stronger-than-expected earnings from banks, including JPMorgan Chase&Co., and by International Business Machines Corp.

JPMorgan, the No. 3 U.S. bank, said its second-quarter profit tripled. ID:nN19191900. After the close on Tuesday, International Business Machines Corp., a Dow component, reported a stronger-than-expected quarterly profit.

JPMorgan shares rose 4.9 percent to .72, while shares of IBM, the world's largest computer services company, rose 3.6 percent to .95.

REUTERS CS DB2014