For stocks, Fed chief in the spotlight

By Cal Mankowski

NEW YORK (Reuters) - Investors banking on more interest-rate cuts may get some clues about what comes next from Federal Reserve Chairman Ben Bernanke, who testifies before the Joint Economic Committee of Congress on Thursday.

"Clearly anything that he says has the potential to move the markets," said Matt Kaufler, portfolio manager at Clover Capital Management Inc., in Rochester, New York.

After the Fed cut interest rates for the second time this year on Wednesday, stocks rallied. But one day later, the gains were erased as the view took hold that further cuts were not in the cards.

With concerns about a credit crunch and losses in subprime mortgages refusing to go away, brokerage downgrades knocked several financial stocks lower.

Investors will be anxiously awaiting the quarterly results of American International Group Inc (AIG.N), due after the market close on Wednesday. The insurer's stock has been hitting 52-week lows on rumors that the results will include losses in subprime securities.

For the past week, the Dow Jones industrial average .DJI fell 1.53 percent and the Standard & Poor's 500 Index .SPX declined 1.67 percent. But the Nasdaq Composite Index .IXIC rose 0.22 percent.

Despite the turmoil, stocks are still higher for the year, with the technology-heavy Nasdaq Composite leading the way.

For the year so far, the blue-chip Dow average is up 9.08

percent, while the S&P 500 is up 6.44 percent and the Nasdaq is up 16.36 percent.

TECHS PROP UP THE MARKET

One of the key technology bellwethers, Cisco Systems Inc (CSCO.O), the largest U.S. communications equipment maker, will report earnings on Wednesday.

Scott Neuendorf, an analyst at Hester Capital Management in Austin, Texas, said he expects Cisco to report higher earnings of 36 cents per share, in line with the consensus forecast.

He said Cisco and other tech companies have benefited from diversification of revenues, including revenues derived from overseas sources.

"The tech sector has been kind of pulling up the whole market," said John Praveen, chief investment strategist for

Prudential International Investments Advisers LLC in Newark, New Jersey.