The stock market is up for the first time this week

The stock market is up for the first time this week (Spencer Platt / Getty Images / August 24, 2012)

Renewed speculation that the Federal Reserve will take action to stimulate the economy erased an early-morning loss and drove the stock market higher in midday trading Friday.

Stocks turned around after the release of a letter in which Fed chairman Ben Bernanke wrote that "there is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery."

The letter to Rep. Darrell Issa, a Republican from California, revived hope that the central bank will take steps in coming weeks, potentially boosting share prices.

The Dow Jones industrial average was up more than 100 points.

It was the market's first gain this week. After rallying earlier this month on rising expectations of Fed intervention, share prices backed off in recent days.

Global stocks also got a boost from a Reuters story that said the European Central Bank is working on a plan to lower interest rates to spark growth on across the sluggish continent.

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