NEW YORK — Stocks fell sharply Wednesday after Federal Reserve Chairman Ben Bernanke confirmed investors’ fears that the economy has weakened. Interest rates dropped in the Treasury market as investors sought safer places for their money.
Bernanke told a congressional committee that the economy is “unusually uncertain.” He said the economy is fragile, but he did not forecast that it would fall back into recession.
The Dow Jones industrial average, which was modestly higher before Bernanke’s prepared remarks, fell 109 points as investors absorbed his assessment of the economy and his statement that the Fed is ready to take action if the economy worsens.
Bernanke’s comments, part of his semiannual report to Congress, weren’t surprising given disappointing corporate earnings numbers released in recent weeks. But they were enough to upset investors who have grown more nervous about the recovery. Some may have been hoping for a more upbeat reading from the Fed chairman.
The Fed is still expecting the economy to expand this year, but the central bank has lowered its forecast for growth.
The market fluctuated for much of the day on another mixed batch of earnings reports. John Merrill, chief investment officer of Tanglewood Wealth Management in Houston, said the day was like many others recently: very little news but lots of professional traders reacting to it.
“Bernanke said he wants to collect more data before doing anything, and that’s just fine. But traders are impatient. They got a ‘buy’ button and a ‘sell’ button, and they’re going to do one or the other,” Merrill said.
The Dow fell 109.43, or 1.1 percent, to 10,120.53. The broader Standard & Poor’s 500 index fell 13.89, or 1.3 percent, to 1,069.59. The Nasdaq composite index lost 35.16, or 1.6 percent, and fell to 2,187.33.
