US stocks closed sharply lower after Federal Reserve chairman Ben Bernanke offered no new insight into whether the central bank will act soon to prop up the economy.
In a speech closely watched by investors, Mr Bernanke said the Fed will consider a range of steps at its September 20-21 meeting, but he offered no specific plans.
The Dow Jones industrial average fell 100 points shortly after Mr Bernanke’s remarks began this afternoon.
“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 US 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 weaker corporate profits.
President Barack Obama will lay out his jobs plan at a joint session of Congress tonight. He is expected to announce a 300 billion US dollar (£188 billion) package that includes tax cuts, additional state aid and spending on infrastructure.
The Dow Jones industrial average fell 119.05 points, or 1%, to 11,295.81. The Standard & Poor’s 500 index fell 12.72, or 1.1%, to 1,185.90. The Nasdaq composite shed 19.80, or 0.8%, to 2,529.14. Each index had posted gains earlier in the day.
Cisco Systems led the 30 Dow stocks with a 2.6% gain. JPMorgan Chase, Bank of America and Boeing each fell 3%, 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 US 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 US economy in August.
Not all of the economic news on Thursday was negative. American exports of cars, planes and other goods reached an all-time high in July, the Commerce Department reported. Economists said the jump in exports suggests future growth in the US economy.
“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, a restaurant booking and review website, dropped 8% to 57.50 after Google announced it was buying OpenTable rival Zagat, a publisher of restaurant reviews in print and online. Pall slumped 10%, 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 jumped 6% to 14.44 after Third Point, an activist investment fund, disclosed that it has bought a 5.2% stake in the troubled web portal and called for sweeping changes to the board. Yahoo’s board fired CEO Carol Bartz on Tuesday after two-and-a-half years on the job. She harshly criticised the board in an interview published on Thursday.
Four stocks fell for every one that rose on the New York Stock Exchange. Volume was lower than average at 3.7 billion shares.