Stocks had been up strongly in the morning, before Bernanke declared that the Fed is ready to take more action to help an economy that's "far from satisfactory." They briefly gave up their gains, then rebounded. At one point the Dow was up as many as 151 points.
In early afternoon trading, though, stocks were still up, though not as much. The Dow Jones industrial average was up 79 points at 13,079. The Standard & Poor's 500 index rose six points to 1,405. The Nasdaq was up 14 points to 3,062.
Investors have been watching to see whether the Fed will buy more bonds to further lower long-term interest rates, although few expected him to announce new bond-buying Friday. Bernanke said the Fed "should not rule out" new policies to improve the job market. But he stopped short of committing the Fed to any specific move.
Bernanke "was a primary reason for the markets being as volatile as they are today," said Frank Fantozzi, CEO of Planned Financial Services in Cleveland.
His comments got a more uniform reception in energy markets, which tend to rise on bullish signs for the economy. Oil prices jumped $1.56 to $96.18 per barrel on the New York Mercantile Exchange. Natural gas, heating oil, and wholesale gasoline prices all rose more than 1 percent.
Also Friday, the Commerce Department said factory orders rose 2.8 percent in July on surging demand for autos and commercial planes. However, orders for core capital goods — a key measure of investment spending — dropped 4 percent. That was that figure's fourth decline in five months.
Investors seemed more focused on Bernanke's comments and the overall higher factory orders, though.
Stocks rose in nine out of 10 industry groups in the S&P 500. Utility stocks declined slightly. Energy stocks had the biggest gain, up 0.8 percent.
Other shares with big moves on Friday included:
— Facebook set new lows, falling 78 cents, or 4.1 percent, to $18.31 per share. Its previous intraday low was $18.75. The stock is down nearly 52 percent from its $38 initial public offering price.
— US Airways Group Inc., up 3.3 percent after disclosing that it signed a confidentiality agreement that signals the beginning of talks with American Airlines for a possible merger.
— Zumiez fell 10 percent after the specialty sports and clothing retailer said third-quarter earnings would be lower than analysts had expected.
— Science Applications International Corp. rose 5 percent after saying it will split at the end of next year into two businesses, with one focusing on national security, engineering and health customers, and another focused on government customers.
Stocks in Europe were mixed. The German DAX and the CAC 40 in France both rose about 1 percent. The FTSE 100 in Britain fell 0.1 percent.
The dollar fell, with the euro rising to $1.256, and the Japanese Yen rising against the dollar to 78.33.