Wall St slumps on Fed speech

US stocks closed sharply lower yesterday after Federal Reserve chairman Ben Bernanke gave no indications of new stimulus measures to boost the flagging economy in a keenly awaited speech.

Investors have been looking to Bernanke, who gave his outlook on the US economy yesterday, and other policymakers to address a host of concerns from slowing global growth to Europe’s debt crisis.

Banks were the biggest decliners after sharp gains on Wednesday. They have been one of the most turbulent sectors in the volatility that has engulfed equity markets this summer. The KBW Bank Index fell nearly three per cent.

The Dow Jones industrial average dropped 119.05 points, or 1.04 per cent, to 11,295.81. The Standard & Poor’s 500 Index fell 12.72 points, or 1.06 per cent, to 1,185.90. The Nasdaq Composite Index lost 19.80 points, or 0.78 per cent, to 2,529.14.

The VIX volatility index, a measure of expected market turbulence, rose three per cent to 34.37.