Wall Street gains on Fed speech

United States stocks close modestly higher as Fed chairman Bernanke says stimulus is not 'on a preset course'.

United States stocks closed higher after Federal Reserve Chairman Ben Bernanke said the Fed's policy on tapering its bond-buying program was not on a "preset course."

At the closing bell, the Dow Jones Industrial Average added 16.82 (0.11%) at 15,468.67.

The broad-based S&P 500 put on 4.52 (0.27%) at 1,706.11 points.

The tech-rich Nasdaq Composite Index increased 11.50 (0.32%) to 3,610.00 points.

The gains came after Mr Bernanke reiterated, in testimony to a House of Representatives committee, that the Fed would likely scale back the bond-buying program later this year, but only if the economy improves.

"I emphasise that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course," Mr Bernanke told the lawmakers.

Several leading companies reported earnings, but markets were more preoccupied by Mr Bernanke's prepared testimony to Congress, which reaffirmed that the Fed would taper the $US85 billion ($A92.49 billion)-a-month bond-purchase program only if the economy improves.

With unemployment still high and falling slowly and inflation very low, Mr Bernanke said, "a highly accommodative monetary policy will remain appropriate for the foreseeable future."

He also sought to soften the central bank's stance on meeting a 6.5% unemployment threshold before it would consider raising interest rates.

In his testimony, Mr Bernanke defended the Fed's outlining of a tentative plan for pulling back on stimulus efforts, arguing there would otherwise have been a possibility that markets would become too risky.

When Mr Bernanke said in June that the Fed may start scaling back on its stimulus program, US stocks hit two-month lows, only to set new records last week after Mr Bernanke said stimulus spending would remain accommodative for the foreseeable future.

The market's leading indices traded in a narrow band during and after the testimony, reflecting that Mr Bernanke's testimony yielded no major surprises, analysts said.

"It's more of the same," said Bill Lynch, director of investments at Hinsdale Associates. Bernanke is "pretty much repeating the same thing as last week."