Stocks fell again Tuesday after Fed Chairman Ben Bernanke said the U.S. economy had not grown as quickly as had been expected so far this year.
Dow Finishes Down 19, Nasdaq Dips 1
NEW YORK (AP) — Stock indexes closed lower Tuesday, giving up earlier gains, after Federal Reserve Chairman Ben Bernanke said the economic recovery remains uneven. Bernanke offered no new steps to stimulate growth.
The Dow Jones industrial average had been up as many as 89 points but turned lower in the late afternoon as Bernanke’s speech started. The Dow’s loss of 19 was the fifth straight decline for the index, the longest string of losses since August.
Bernanke said the U.S. economy had not grown as quickly as had been expected so far this year. He said growth has been held back by disruptions of industrial supplies from Japan following the tsunami and nuclear disaster there and higher gas prices.
Bernanke expects the economy to pick up in the second half of the year, but he acknowledged that the pace of the growth remains “frustratingly slow from the perspective of millions of unemployed and underemployed workers.”
Some investors had been hoping Bernanke would announce additional measures to support the economy. Major indexes fell after it became clear that Bernanke was not wavering from his view that the U.S. economy is growing gradually and does not need more stimulus. The Fed’s $600 billion bond-buying program, which is aimed at keeping interest rates low, is ending at the end of June.
“People are getting skittish,” said Brian Wenzinger, a portfolio manager at Aronson Johnson Ortiz in Philadelphia. “Housing is getting worse, and they’re rethinking a possible double-dip recession.” But, Wenzinger added, the relatively small drop in the stock market was a positive sign following several days of steep losses.
The Dow Jones industrial average lost 19.15 points, or 0.2 percent, to close at 12,070.81. The Standard and Poor’s 500 dipped 1.23, or 0.1 percent, to 1,284.94. The Nasdaq composite shed 1, or less than 0.1 percent, to 2,701.56.
Stocks have swooned since late April because of concerns that the U.S. economy is stalling from a combination of high gas prices, weaker than expected hiring and a slowdown in manufacturing. The Dow has fallen nearly 500 points over the last five days. The S&P remained below the psychologically important level of 1,300 for the second straight day and closed at its lowest level in two and a half months.
The Labor Department reported that businesses had fewer job openings in April. The government said that employers posted 3 million ads for jobs in April, down from 3.1 million in March. The figure added to the stack of other signs that the U.S. is having an employment crisis. However, the report did little to change the direction of stocks.
In corporate news, a contentious acquisition proposal ratcheted up the stock price of all companies involved. International Paper Co. rose 0.4 percent after smaller rival Temple-Inland fought back against International Paper’s hostile takeover bid for $3.3 billion in cash. Temple-Inland soared 40 percent on the news. Weyerhaeuser Co. rose 5 percent, the most of any company in the S&P 500, on suspicion it was another takeover candidate for International Paper.
Cablevision Systems Corp. rose 4.5 percent after the New York-area cable company set a date when it would spin off its cable networks. The company plans to divest popular television networks including AMC, which broadcasts the popular “Mad Men” show on June 16. Investors prefer the sleeker broadcast networks like WE TV, IFC and the Sundance Channel operating on their own to the current unwieldy corporate structure.
Rising shares narrowly outnumbered falling ones on the New York Stock Exchange. Volume was 3.6 billion shares.
AP Business Writer Bernard Condon contributed to this report.