Wall Street: Thanks, Bernanke

NEW YORK (CNNMoney.com) -- Stocks jumped Friday morning after Fed chairman Ben Bernanke hinted that the central bank is likely to cut interest rates at the next policy meeting, reassuring investors worried about the ongoing turmoil in financial markets.

The Dow Jones industrial average (Charts) climbed 0.9 percent. The broader S&P 500 index (Charts) gained 1 percent and the tech-fueled Nasdaq (Charts) composite advanced 0.7 percent. The Russell 2000 small-cap index jumped nearly 1.5 percent.

Bernanke said Thursday night that the Fed remains concerned about the problems in the housing and credit markets and the threat posed to consumer spending and the economy. He said the Fed would remain "exceptionally alert and flexible" leading up to the next policy meeting on Dec. 11, all of which seemed to signal to Wall Street that the Fed will cut rates again.

Traders are currently betting that the central bank will cut rates by at least a quarter percentage point at the next meeting, with some banking on a half-point cut. The Fed has cut interest rates at the last two policy meetings, lowing the fed funds rate, a key short-term interest rate, by 75 basis points since September. There are 100 basis points in one percentage point.

Stocks surged Wednesday after Donald Kohn, the Fed's No. 2 official, also hinted at rate cuts in a speech, saying that the central bank needs to be "nimble" in the face of the economic uncertainty.

Stocks have also gotten a boost this week from technical factors, following Monday's selloff. That decline left the three major gauges down at least 10 percent from the October highs, the definition of a "correction." Traders seemed to be using that "correction," as an opportunity to get back into stocks at lower levels. Stocks have gained every session since then.

In other news Friday, personal income and spending gains slowed in October, missing forecasts. The core PCE deflator, the report's inflation component and a measure watched by the Fed, rose 0.2 percent, in line with forecasts.

A separate report, the Chicago PMI, rose to 52.9 in November, up from the previous month and topping expectations. The report tracks manufacturing activity in the Midwest.

In corporate news, Dell (Charts, Fortune 500) reported higher quarterly sales and earnings late Thursday that were nonetheless short of forecasts. Shares fell Friday morning.

Treasury prices slipped, raising the yield on the 10-year note to 3.99 percent from 3.93 percent late Thursday.

In currency trading, the dollar gained versus the euro and slipped versus the yen.

COMEX gold for February delivery tumbled $7.70 to $794.60 an ounce, falling along with other dollar-traded commodities.

Oil prices tumbled as well, falling below the $90-a-barrel mark.