NEW YORK – Stocks closed sharply lower Thursday after Federal Reserve Chairman Ben Bernanke offered no specific plans 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. The Dow Jones industrial average fell 100 points shortly after Bernanke's remarks began at 1:30 p.m. Eastern. It ended down 119.
"The implications are that the Fed is going to act, but the market is disappointed because he was a little short on details," said Scott Brown, chief economist at Raymond James.
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.
The economic worries have pushed the prices of Treasurys and highly-rated corporate bonds higher and their yields lower. The yield on the 10-year Treasury note was 1.99 percent Thursday, down from 3 percent July 25. Mortgage rates, which are affected by Treasury yields, fell to their lowest level in six decades, Freddie Mac reported Thursday.
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.
Cisco Systems Inc. led the 30 Dow stocks with a 2.6 percent gain after it was upgraded by analysts. JPMorgan Chase & Co., Bank of America Corp and Boeing Co. each fell 3 percent, pulling the average lower.
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. A weaker dollar has helped American exports this year. The dollar has fallen 8 percent over the last 12 months against an index of six other currencies.
"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 3.9 billion shares.
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