During a second day of testimony about the economy, Fed Chairman Ben Bernanke reiterated that the US central bank would be ready to inject more money should the economy get worse. But he told a US Senate committee that the time had not come yet and noted inflation had picked up since late 2010.
Stocks had climbed on Wednesday as investors took Bernanke’s remarks before a House panel as signaling the possibility of more stimulus for the economy if the outlook worsens. The central bank’s most recent stimulative program contributed to strong equity gains since September.
“Bernanke has backed off considerably from what might have been more stimulus, and that made yesterday’s rally like eating sugar for lunch: Nothing more than a short burst of energy,” said Kent Engelke, chief economic strategist at Capitol Securities Management in Richmond, Virginia.
The market had started off higher on positive JPMorgan results and a report showing new claims for US jobless benefits fell slightly last week, but those gains melted away as Bernanke spoke.
The Dow Jones industrial average was down 64.37 points, or 0.52 per cent, at 12,427.24. The Standard & Poor's 500 Index was down 9.99 points, or 0.76 per cent, at 1,307.73. The Nasdaq Composite Index was down 37.65 points, or 1.34 per cent, at 2,759.27.
Technology stocks were yesterday’s top decliners, continuing their losing streak for a second day. The Merrill Lynch Semiconductor HOLDRS Trust lost 1.1 per cent to $32.52, just below its 200-day moving average.
Google shares slipped 1.7 per cent to $529.24 ahead of its earnings report after the bell.
JPMorgan Chase & Co shares rose 2.5 per cent to $40.61 after the bank reported a higher-than-expected profit as it wrote off fewer bad mortgages and credit card loans. The Dow component was by far the top gainer in the S&P financial index.
News Corp shares fell 2.8 per cent to $15.49 on heavy volume after the US Federal Bureau of Investigation said it would probe allegations that the company hacked into the phone records of victims of the 11 September, 2011, attacks on the United States.