The Dow Jones industrial average initially jumped more than 130 points on Bernanke's comments but bobbled up and down, perhaps because investors realize that it will take more than rate cuts to restore the economy's upward momentum. Still, Bernanke's comments appeared to reassure a market that has stumbled since the start of the year amid growing evidence that the economy is weakening.

The Fed chief said the central bank is prepared to act aggressively to rescue a weakening economy.

"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks," he said.

Jim Herrick, manager of equity trading at Baird & Co., said, "We're seeing this pop here, but I think it's temporary."

He added that many investors have been betting for some time that the Fed will lower rates by a half-point at their next meeting. "There's still subprime issues. We still have concerns about earnings, and the mortgage market."

Investors were also likely still mindful of a profit warning Thursday from Capital One Financial Corp. and that while rate cuts can help lubricate the economy they can't erase woes like soured debt.

And Bernanke's comments arrived a day after Goldman Sachs rattled some investors by forecasting a recession for 2008.

The credit card issuer warned that its 2007 profit will fall short of expectations because of increased loan delinquencies and additions to its legal reserves in the fourth quarter.

In midday trading, the Dow, which had been down more than 100 points in early trading and then popped after Bernanke's comments, rose 90.06, or 0.71 percent, to 12,825.37.

Broader stock indicators also rose after Bernanke's comments. The Standard & Poor's 500 index advanced 6.83, or 0.48 percent, to 1,415.96, and the Nasdaq composite index rose 11.60, or 0.47 percent, to 2,486.15.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 930.4 million shares.

Bond prices fell following Bernanke's comments. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.84 percent from 3.83 percent from late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

Some observers said the rush of corporate news expected in the coming weeks could overshadow discussions about the Fed, whose rate-setting committee isn't scheduled to meet again until the end of the month.

"For the next hour and a half, the Fed chairman's speech is super important. For the next couple of weeks, though, take a hard look at earnings," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.

While Bernanke's comments buoyed the market, investors still weighed corporate news, such as that from Capital One. The company's announcement confirmed fears of some analysts that the erosion of the subprime mortgage market has hurt other credit classes. It also renewed jitters that slowing economic growth could hurt upcoming corporate earnings reports more than previously thought.

Capital One fell $1.63, or 3.8 percent, to $41.72.

In other corporate news, a combination involving Delta Air Lines Inc. may be close, the head of the carrier's pilots union said in a letter to rank-and-file members Wednesday. In November, Delta denied reports that it was talking to UAL Corp.'s United Airlines about a combination. Since then, it has said little about the issue. Some analysts have suggested recently that a Delta-Northwest combination may be possible.

Delta gained $1.24, or 9.2 percent, to $14.76. UAL rose $3.32, or 12.8 percent, to $29.35, while Northwest jumped $2.74, or 22.8 percent, to $14.75.

The market's back-and-forth moves Thursday came a day after Wall Street finished a volatile session sharply higher as investors sought bargains but remained concerned about the strength of the economy and upcoming corporate results. The Nasdaq showed its first gain in nine sessions, while the Dow jumped nearly 150 points.

Also Thursday, the Russell 2000 index of smaller companies rose 6.58, or 0.92 percent, to 718.70.

Overseas, Japan's Nikkei stock average closed down 1.45 percent. Britain's FTSE 100 fell 0.80 percent, Germany's DAX index dropped 0.89 percent, and France's CAC-40 fell 0.64 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.