August 7, 2022

Stocks Slip After Bernanke Comments

The Dow Jones industrial average closed down 19.15 points, or 0.16 percent, at 12,070.81. The S. P. 500 fell 1.23 points, or 0.10 percent, to 1,284.94. The Nasdaq composite index lost 1.00 point, or 0.04 percent, at 2,701.56. A day earlier, the Standard Poor’s 500-stock index hit its lowest level in more than two months, and analysts said the recent downtrend was likely to remain in place.

Helping to put a floor on commodity prices, the dollar fell to a one-month low against a basket of currencies after a Chinese official predicted that it would continue to weaken versus other major currencies.

The S. P. 500 has fallen 4.9 percent since a recent high at the start of May, and on Monday closed at its lowest level since March 18, having fallen through its April low in the last session. Some investors look for further volatility and a possible move lower before equities stabilize.

“We came a long way yesterday,” said John Brady, senior vice president at MF Global in Chicago. “I think that there is going to be a growing nervousness in the market.”

Peter Cardillo, chief market economist at Avalon Partners in New York, said, “Certainly yesterday’s close indicated that from a technical standpoint this market is going to work its way lower before we stabilize.” Mr. Cardillo said he expected the S. P. 500 to hold at 1,275 but cautioned that a move below that could prompt more selling. Analysts at Brown Brothers Harriman in New York look for a decline to 1,230.

“I think the market is trying to focus on whether or not this is a temporary decline in economic activity, or is this going to mushroom into something worse,” said Mr. Cardillo, referring to the recent batch of weak economic data.

European stocks edged higher after a four-session losing run, rebounding from an 11-week closing low.

Helping the rebound, the European Central Bank chief, Jean-Claude Trichet, said a restructuring of Greece’s public debt, which many in the market see as inevitable, was inappropriate as long as the government followed through on reforms.

Brent crude fell 0.3 percent but traded above $114.19 a barrel, while gold and copper futures in the United States climbed. Gold was benefitting from the soft dollar and safe-haven investors.

The Federal Reserve chairman, speaking on the economic outlook at a bankers conference in Atlanta, said that the pace of recovery “seems likely” to increase during the rest of the year. Mr. Bernanke also said that he continued to see no evidence of broad and enduring inflation despite recent increases in the prices of oil and other commodities.

Fed officials have said recent economic data were a disappointment, with Eric S. Rosengren, president of the Boston Fed, suggesting it could delay the Fed’s exit from its extremely easy monetary policy.

Article source: http://feeds.nytimes.com/click.phdo?i=d4dd4efc558509346bba3d0cb0c07263

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