Federal Reserve Chairman Ben Bernanke obliged a nervous financial commenting class on Friday when he said the Fed isn't out of options for supporting the economy.

In a closely parsed speech, Bernanke said the Fed remains committed to making monetary policy adjustments "as needed to support the recovery." However, he did not signal that the Fed will actually renew its efforts to undertake quantitative easing, a policy of buying securities to keep long term interest rates low.

That level of commitment lifted stocks Friday, but market watchers say it won t keep investors at ease for long.

Barry Knapp, chief U.S. strategist at Barclays Capital, warned that stockholders will still have to grind out a longer stretch in which they settle for defensive postures and look for relative performance which could mean simply losing less than the broad market.

In an Aug. 23 note, Knapp said defensive sectors utilities, health care, consumer staples, telecoms and energy "will see persistently strong relative performance during market declines and rallies."

Bernanke spoke in careful, general terms. Perhaps his most reassuring statement was the assertion that the Fed remains "prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly. He added, The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do."

Investors were very receptive Friday and drove the Dow Jones Industrial Average up 166 points, erasing most of the preceding week's losses, though the index was still down 0.2% for the week. The S&P 500 also rose 17 points Friday for a week-long drop of 0.3%.

The market s earlier declines had been driven by increasingly pessimistic investor reaction to discouraging economic data. That, in turn fueled a louder chorus of economists and strategists, who argued that the recovery still needed some help, and before Bernanke s speech, some remained skeptical it would come from the Fed.

"The moves suggest that markets were either spooked by the Fed s downbeat assessment of the economy, or are skeptical about the Fed s ability to do anything about the coming slowdown," Societe Generale U.S. economist Aneta Markowska said in a Friday commentary ahead of the speech.

ISI Group chairman and economist Ed Hyman took an inventory of the slowing recovery early in the weak and noted stock market slides, weaker commodity prices and declining bond yields. The 10-year Treasury bond yield on Wednesday dropped to 2.418%, its lowest level since January 2009.

In a Tuesday note, Hyman said persistently weak employment was squeezing the recovery, which was borne out by Friday's downward revision of the gross domestic product the value of all goods and services produced.

Second-quarter GDP growth was lowered to 1.6% from a July estimate of 2.4%.

"It appears that the recovery, due to these two shortfalls, has not reached sufficient velocity to pull away from the drags it faces, and needs another booster," Hyman wrote. He predicted renewed quantitative easing by the end of the year.

As experts reacted to Bernanke's speech, they emphasized the divide between market perception and government action.

"While real GDP has slowed recently and consumer confidence has remained low, it's still tough to make the near-term 'double-dip' the base case," Strategas Research Partners chief economist Don Rissmiller wrote Friday.

"As such, Fed Chairman Bernanke's comments are probably best interpreted as a marginal step toward additional easing near-term, but not something more than that."

Ethan Harris, head of developed economics research at Bank of America Merrill Lynch (BAC), said the speech was a way to buy time and see if the recovery can gain traction without further policy help.

"While we believe that Bernanke thinks the recovery is set to continue, we judge it likely that he does see greater downside risks, Harris wrote Friday. In fact, he mentioned concern about the weakness in the labor market and high duration of unemployment. However, since Bernanke was not ready, at this forum, to signal a move toward an easing bias, he had to deliver the message of faith in the economic outlook."