Market Outlook: Bernanke May Set Tone for Rest of Summer

While many traders hope for talk of more Fed easing, Federal Reserve Chairman Ben Bernanke will likely tell members of Congress in the coming week that it’s the lawmakers who need to act.
Bernanke gives his semi-annual testimony on the economy, before a Senate panel Tuesday and a House Financial Services committee Wednesday.

“He is going to scold yet again on the fiscal cliff,” said Diane Swonk, chief economist at Mesirow Financial. “He has to mention it. It’s already suppressing growth right now.”

Besides Bernanke, there is a busy economic calendar, starting with Monday’s retail sales and including consumer inflation and several housing reports. 

While earnings news may or may not confirm the slowing economy, it is Bernanke’s testimony that could help set expectations for the rest of the summer.

The Fed has made it clear it has come to no agreement on further easing, and Bernanke and others have kept quantitative easing, or QE, as an option if the economy or financial conditions deteriorate.

Still, just the idea of another round of Fed asset purchases has provided support for the stock market, and there is already speculation that Bernanke will discuss it during his Jackson Hole speech in late August, as he did two summers ago.

Read more: http://www.cnbc.com/id/48178028