New York: Wall Street stocks lost ground Wednesday as the market digested comments from Federal Reserve chief Ben Bernanke on an exit strategy from a massive stimulus and weighed prospects for a bailout of Greece.
The Dow Jones Industrial Average fell 20.86 points (0.21%) to 10,037.78 at the closing bell in a choppy session that saw swings in both directions.
The Nasdaq composite lost 3.00 points (0.14%) to 2,147.87 and the broad-market Standard & Poor’s 500 index retreated 2.46 points (0.23%) to a preliminary close of 1,068.06.
Investors were unsettled by comments released by Bernanke that evoked mixed reactions about when the Fed may exit from a massive monetary stimulus.
“The market sold off after the release of the text,” said Gregory Drahuschak at Janney Montgomery Scott.
Bernanke offered hints of higher interest rates as the central bank ends its massive stimulus effort but argued that an “accommodative” monetary stand is still needed to sustain a recovery.
“The economy continues to require the support of accommodative monetary policies,” Bernanke said, using the Fed code for exceptionally low interest rates.
“However, we have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus. We have full confidence that, when the time comes, we will be ready to do so.”
The comments prompted a mixed response from analysts.
Bernanke’s testimony “makes it clear he does not expect to tighten policy in any meaningful way anytime soon,” said Ian Shepherdson at High Frequency Economics.
But independent market analyst Larry Doyle said Bernanke sent a “very clear sign that he will soon start to raise selected rates.”
The market also awaited news as European Union leaders prepared to meet in Brussels Thursday, with attention increasing on offering financial guarantees to Greece to avert a debt crisis and soothe the financial markets.