New York – Stocks fell Wednesday after Federal Reserve Chairman Ben Bernanke chided investors who may have looked past long-standing concerns about inflation. The Dow Jones industrials fell nearly 100 points, the third straight session of declines.
A rise in oil prices to a six- month high and a weaker-than-expected rise in orders for large manufactured goods compounded investors’ concerns Wednesday.
In Capitol Hill testimony, Bernanke said while core inflation slowed modestly in the second half of 2006, recent readings remain “uncomfortably high.” He also said troubles among some mortgage lenders that cater to those with poor credit don’t appear to have spread to the broader economy, though he added the situation requires further observation.
Stocks rallied last week after investors interpreted language from the Fed as opening the way to the possibility of a reduction in interest rates. But concerns about inflation could reverse those hopes, even as the economy continues to cool.
“I think what the Fed is trying to tell us is that it is between a rock and a hard place. And when you’re between and a rock and a hard place, you just can’t move,” said Drew Matus, senior economist at Lehman Brothers Holdings Inc.
Adding to concerns, oil prices continued to climb amid political tensions in the Middle East over Iran’s detention of British sailors and marines.
Light, sweet crude rose $1.15 to settle at $64.08 per barrel Wednesday, its highest level since Sept. 11, 2006.
The Dow industrials fell 96.93, 0.78 percent, to 12,300.36.
Broader stock indicators also pulled back. The Standard & Poor’s 500 index fell 11.38, 0.80 percent, to 1,417.23, and the Nasdaq composite index fell 20.33, 0.83 percent, to 2,417.10.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.62 percent.
