US stocks ended nearly flat yesterday, giving up most of the day’s gains after Fed Chairman Ben Bernanke reiterated that monetary policy won’t be enough to offset damage from the “fiscal cliff.”
His comments followed the Federal Reserve’s announcement of a new stimulus plan, which briefly pushed the S&P 500 to a seven-week high.
The plan, the latest attempt to boost the country’s struggling economy, will replace a more modest program set to expire with a fresh round of Treasury purchases that will increase its balance sheet. The program is known as “quantitative easing” or QE.
In comments after the announcement, Bernanke said he hopes that markets won’t have to tank to get a fiscal cliff deal.
Bernanke “reiterated the fact that monetary policy has its hands tied as far as addressing the seriousness of going over the fiscal cliff,” Hellwig added. The S&P financial sector index, which had been up more than one per cent after the Fed’s announcement, ended up just 0.5 per cent.
Wal-Mart Stores’s stock was the biggest drag on the Dow, falling 2.8 per cent to $68.94 following the Indian government’s announcement of an inquiry into the company’s lobbying practices.
The Dow Jones industrial average slipped 2.99 points, or 0.02 per cent, to 13,245.45 at the close. The Standard & Poor’s 500 Index inched up just 0.64 of a point, or 0.04 per cent, to 1,428.48. But the Nasdaq Composite Index shed 8.49 points, or 0.28 per cent, to end at 3,013.81. Though the S&P 500 ended up just slightly, it was the sixth day of gains for the index – its longest winning streak since August.