Bernanke’s caution worries Wall Street
US stocks ended little changed yesterday, held in check by worries about Europe’s debt crisis, which frustrated investors looking for a reason to take shares to new highs for the year.
Germany rejected a call for Eurozone finance ministers to increase the size of a €750bn safety net for debt-stricken members.
A decline in the euro limited US stocks’ advance as the two have have moved in a tight correlation recently, with the euro acting as a proxy for debt concerns overseas.
Further adding to conflicting sentiment were downbeat comments from US Federal Reserve chairman Ben Bernanke about the economy, which offset his attempts to reassure markets the Fed could step up its economic stimulus efforts if necessary.
“The tone of his voice made me nervous. As a trader and a manager, it made me nervous,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
“I think he was trying to sell the American people because he has been under pressure.”
The Dow Jones industrial average dropped 19.90 points, or 0.17 per cent, to 11,362.19. The Standard & Poor’s 500 Index shed 1.59 points, or 0.13 per cent, to 1,223.12. The Nasdaq Composite Index gained 3.46 points, or 0.13 per cent, to 2,594.92.
Technology shares limited declines after positive brokerage comments on Cisco Systems and Cognizant Technology Solutions. Cisco rose 1.9 per cent to $19.43 after Oppenheimer raised the stock to “outperform,” and Cognizant added 0.7 per cent to $69.80 after Goldman Sachs boosted it to “buy.”
Despite the day’s dip, analysts see the S&P 500 soon breaking out of its recent range and surpassing its current intraday high for the year just above 1,227 reached on 5 November.
Analysts view key resistance for the benchmark index at 1,228 because it’s just above the year’s high and coincides with the 61.8 per cent Fibonacci retracement of the 2007-2009 bear market slide. Volume was light with about 6.27bn shares traded on the New York Stock Exchange and Nasdaq, well below the year-to-date average of 8.62bn.