Investors have been looking to Mr. Bernanke, who gave his outlook on the economy on Thursday, and other policy makers to address a host of concerns like slowing global growth and Europe’s debt crisis.
A rise in jobless claims reported earlier in the day underscored the weakness in the economy, only hours before a scheduled speech by President Obama on a plan for creating jobs.
“The Fed hasn’t come out with more options or tools that the market wants or was expecting,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, N.Y. “The market was disappointed because this wasn’t a game changer.”
Banks were the biggest decliners after gains on Wednesday. They have been some of the most turbulent companies in the volatility that has engulfed equity markets this summer. The KBW Bank Index fell nearly 3 percent.
The Dow Jones industrial average dropped 119.05 points, or 1.04 percent, to 11,295.81. The Standard Poor’s 500-stock index fell 12.72 points, or 1.06 percent, to 1,185.90. The Nasdaq composite index lost 19.80 points, or 0.78 percent, to 2,529.14.
Among bank shares, JPMorgan Chase fell 3.8 percent to $33.51. Bank of America fell 3.7 percent to $7.20. The S. P. 500 financial sector index lost 2.3 percent.
The current market conditions mean short-term views are dominating and company fundamentals are taking a back seat.
“All of a sudden everybody is a trader, now, nobody is an investor,” said Samuel Ginzburg, a senior trader at First New York Securities. “Everything is trading macro, everything is trading on psychology and everybody is staring at charts.”
Stocks of health insurers fell, including Aetna, which dropped 1.9 percent to $39.19. On Thursday, a federal appeals court overturned a lower court ruling that the federal government could not compel people to buy health insurance. The appeals court ruled that Virginia did not have standing to challenge the federal law. It did not rule on whether the mandate itself was constitutional.
Yahoo shares rose 6.1 percent to $14.44 after a top shareholder, Third Point, demanded that Yahoo overhaul its board.
Separately, the government said the United States trade deficit narrowed considerably in July, a positive sign for economic growth after a sluggish first half of the year.
The trade gap shrank 13.1 percent to $44.8 billion in July, Commerce Department data showed, compared with June’s $51.6 billion deficit and forecasts around $51 billion.
The decline was the biggest month-to-month percentage drop in the trade deficit since February 2009.
“The trade numbers are probably sufficiently better than expected to cause some upward revision in the G.D.P. forecast,” said Pierre Ellis, a senior economist at Decision Economics in New York.
Also on Thursday, the Labor Department said that applications for unemployment benefits rose to 414,000 in the week ending Sept. 3 from an upwardly revised 412,000 the previous week. Analysts forecast a dip to 405,000.
Excluding one week in early August, jobless claims have held above 400,000 since early April. The Labor Department said there was no discernible effect from recent storms on the national figures this week.
The Treasury’s 10-year note rose 19/32, to 101 11/32. The yield fell to 1.98 percent, from 2.04 percent late Wednesday.
Article source: http://feeds.nytimes.com/click.phdo?i=31cc11d63d76449b7164936abc3620a9
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