Thursday erased much of the previous day gains as Federal Reserve Chairman Ben Bernanke failed to inspire renewed confidence in the economy among jittery investors. Bernanke said that the Federal Bank would not be taking immediate steps to stimulate growth.
The Dow Jones Industrial Average began sliding shortly after the announcement as did the following Standard & Poor's 500-stock index and the Nasdaq Composite. Bernanke’s failure to reveal further insight into the central bank’s economic support plans prior to the meeting of the Fed's decision-making body on Sept. 20-21 led most all sectors lower, with the financial and industrial sectors leading the way.
Lingering hope from Bernanke’s last speech in Jackson Hole, Wyo., led to disappointment in the markets today that had a particularly rough impact on banks. Banks have been having a tough run of it and have been among the most obvious victims of volatility. A rise yesterday in major banks made a quick sell even more appealing than it otherwise would be.
Mostly every bank in the sector was impacted by the broader market pull back with J.P. Morgan Chase (JPM) hit the hardest. For the most part though, the major banks from Bank of America (BAC) to Citigroup (C) were hit in equal measure, between 3 and 4 percent. This, while significant, did not undo yesterdays eight percent gain for Bank of America.
Wells Fargo (WFC) and Goldman Sachs (GS) also retreated for the day on fear that the economic recovery would continue to lag. On the whole, the news yesterday regarding the potential $300 Billion unemployment proposal introduced by President Obama seemed to fade from consciousness. Bernanke’s announcement fast reminded investors of the ongoing challenges the economy is facing domestically and overseas in terms of slowing economic growth.
While recent reports indicate the U.S. is not falling off a cliff just yet, continued growth slowdowns and anxiety over debt contagion in Europe are weighing down the markets and leading Americans to assess the impact that will have on our economy.
The sagging attitudes Thursday also hit insurers, specifically AIG (AIG) and All State (ALL) which were both down on high-volume for the day.
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