Bernanke Reassures Markets That Subprime Contagion Contained

The markets are lower in early trading, but not by much. Fed Chairman Bernanke made a speech this morning about the subprime lending market. He said he does not expect significant spillovers to hurt the rest of the economy, but he does not want to see credit lending restricted by such an amount that it restrains our financial system.

Retail stocks are strongest out of the gate this morning. KSS reports earnings after the close. And last night, HPQ reported a strong quarter and guidance.

Jobless claims unexpectedly fell in this morning's report, indicating that the labor market remains strong. This is pushing bond yields higher, with the 10-year at 4.73%, approaching its April highs near 4.77%. Oil is also a bit higher, trading at $62.90.

Asian markets were mixed overnight, and the Yen is lower once again versus the dollar. Yesterday's session showed a surprisingly strong run into the close. I think today will be more of a quiet consolidation day.