Stocks move lower on Fed comments
NEW YORK » Wall Street's interest-rate anxiety sent stocks moderately lower yesterday after comments from Federal Reserve Chairman Ben Bernanke compounded investors' inflation concerns amid a surge in oil prices.
Stocks had traded in positive territory for most of the session, lifted by an upbeat sales report from Wal-Mart Stores Inc. and a raft of solid economic data on industrial activity, construction and consumer spending. But the market took a late-day dive following reports that Bernanke said he was worried about media and investor speculation that the Fed is done raising interest rates in its long-running battle against inflation.
Last Thursday, Bernanke told a congressional panel the central bank could pause -- but not necessarily stop -- its string of rate hikes while it keeps a close watch on the economy's health. However, according to CNBC, Bernanke said future increases will depend mostly on economic data; that stand was troubling to an interest rate-sensitive market.
A spokeswoman for the Federal Reserve, Michelle Smith, declined to comment on the CNBC report.
Although the day's better-than-forecast economic numbers gave investors reassurance that the economy is growing at a comfortable pace, Treasury yields jumped as the bond market fretted about interest rates. Continued tension over Iran's nuclear arms program also drove up oil prices almost $2 a barrel.
The Dow Jones industrial average slid 23.85, or 0.21 percent, to 11,343.29, after gaining as much as 61 points early in the session.
Broader stock indicators declined. The Standard & Poor's 500 index dropped 5.42, or 0.41 percent, to 1,305.19, and the Nasdaq composite index lost 17.78, or 0.77 percent, to 2,304.79.
The dollar tumbled against the Japanese yen and was little changed against other major currencies, while gold prices lingered at 25-year highs. Elsewhere, a barrel of light crude added $1.82 to settle at $73.70 on the New York Mercantile Exchange.
Monday's uplifting economic news sparked the bond market's fears about interest rates and sent it running for cover, boosting the yield on the 10-year Treasury note to 5.14 percent from 5.07 percent late Friday.
The day's trading illustrated how precarious Wall Street's gains are when there's even a hint of more rate hikes from the Fed.
Stocks initially rose after the Commerce Department said personal income rose 0.8 percent in March as spending gained 0.6 percent, topping forecasts for both numbers to add just 0.4 percent.