Bernanke Soothes Investor Concerns

The markets are enjoying a huge pop in early trading, on top of yesterday's nice rally. The catalyst for this morning's strength is the comments made by Chairman Bernanke, which eased investors' concerns about what he might say regarding inflation.

Here are some highlights of his comments:

• Inflation pressures are beginning to diminish
• US economy to expand moderately 2007-08
• Signs of stabilization in housing, but still a risk
• "Encouraging" that inflation expectations contained

There was a lot of chatter that Bernanke might make more hawkish comments about inflation, and hint at the possibility of more rate hikes. But he obviously sees inflation pressures as easing, and I think this will enable the Fed to remain on hold for awhile.

Bond yields are plunging on the news, with the 10-year yield falling 7 basis points to 4.75%. That leaves a lower high on the chart, and should help support stocks.

A strong earnings report from Garmin (GRMN) and also Applied Materials (AMAT) is helping the tech sector get a boost. But the strongest group this morning is the broker index (XBD), which is rebounding from the last couple days weakness.

Bernanke's testimony before Congress is starting now.