Stocks close lower following Bernanke remarks
The Dow lost 119.05 points to close at 11,295.81 as Bernanke's address failed to outline specific plans for economic recovery
Henry Ray Abrams/AP
Stocks closed sharply lower Thursday after Federal Reserve Chairman Ben Bernanke offered no new insight into whether the central bank will act soon to prop up the economy.
In a speech closely watched by investors, Bernanke said the Fed will consider a range of steps at its Sept. 20-21 meeting, but he offered no specific plans. The Dow Jones industrial average fell 100 points shortly after Bernanke's remarks began at 1:30 p.m. Eastern.
Concerns about the U.S. economy have pushed stocks lower each month since April. Many traders now say the stock market is pricing in the assumption that the economy is in a recession, meaning limited job growth and a weaker corporate profits.
President Obama will lay out his jobs plan at a joint session of Congress tonight. He is expected to announce a $300 billion package that includes tax cuts, additional state aid and spending on infrastructure.
The Dow Jones industrial average lost 119.05 points, or 1 percent, to 11,295.81. The Standard & Poor's 500-index fell 12.72, or 1.1 percent, to 1,185.90. The Nasdaq composite shed 19.80, or 0.8 percent, to 2,529.14. Each index had posted gains earlier in the day.
Investors received mixed economic data before the market opened. First-time applications for unemployment benefits rose last week to 414,000. Economists had expected 405,000. The prior week's estimate of new claims was also revised higher.
The weekly report on unemployment applications is an important economic indicator for investors. Rising claims can add to concerns that the job market is stalled and the U.S. economy is headed for another recession. Applications need to fall below 375,000 to indicate sustainable job growth. Last week the government reported there was zero job growth in the U.S. economy in August.
Not all of the economic news Thursday was negative. American exports of cars, airplanes and other goods reached an all-time high in July, the Commerce Department reported. Economists said the jump in exports suggest future growth in the U.S. economy.
"The market is sitting around and trying to piece it all together, "said Rob Stein, the founder and global head of asset management at Astor Asset Management. "For all the volatility that we've had recently, the market is going nowhere."
OpenTable Inc., a restaurant booking and review website, dropped 8 percent to $57.50 after Google Inc. announced it was buying OpenTable rival Zagat, a publisher of restaurant reviews in print and online. Pall Corp. slumped 10 percent, to $44.03, after the maker of filtration equipment reported earnings that fell far short of what analysts were expecting. Pall dropped the most of any stock in the S&P 500 index.
Yahoo Inc. jumped 6 percent to $14.44 after Third Point, an activist investment fund, disclosed that it has bought a 5.2 percent stake in the troubled Web portal and called for sweeping changes to the board. Yahoo's board fired CEO Carol Bartz on Tuesday after 2 1/2 years on the job. She harshly criticized the board in an interview published Thursday.
Four stocks fell for every one that rose on the New York Stock Exchange. Volume was lower than average at 3.7 billion shares.