Dow Jones: 12,094.61 (+4.65) Nasdaq: 2,701.56 (–1.00) S&P 500: 1,287.30 (+1.13)US STOCKS extended a losing streak for a fifth day yesterday on mounting concerns about the economy after bearish comments from Federal Reserve chairman Ben Bernanke.
The market, that began on a positive note after the SP 500 hit a two-month low in the previous session, reversed course to turn negative after Mr Bernanke started speaking.
He acknowledged a slowdown in the economy, but offered no suggestion the central bank is considering any further monetary stimulus to support growth.
Mr Bernanke also issued a stern warning to lawmakers in Washington who are considering aggressive budget cuts, saying they have the potential to derail the economic recovery.
“It’s not like the market was expecting a positive comment from him, but not quite this negative, either. But I think the impact would be limited. I don’t see this carrying over to tomorrow’s market,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
Mr Bernanke indicated the latest bout of weakness probably would not last very long and should give way to some growth in the second half of the year.
A batch of weak economic data recently, especially in the job market, has pushed major indexes below their support levels.
The S&P 500 is down 4.2 per cent from a month ago.
Defensive stocks in the healthcare and utility sectors added to gains after Mr Bernanke’s comments, but financials and information technology sectors closely related to growth, turned negative.
“The problem for institutions on a day like today is the volume being light. Any concerted effort to raise funds (sell positions) could have a disproportionate impact on pricing as buyers will be on the thin side,” wrote Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey, in a note to clients.
In company news, International Paper launched a $3.3 billion unsolicited offer for rival Temple-Inland.
Shares of Temple-Inland shot up 40.4 per cent to $29.49, while International Paper’s stock rose 0.4 per cent to $29.78.
Temple-Inland said it adopted a stockholder rights plan to fend off the hostile takeover. – (Reuters)
