Black Money: Fed Chairman Scares the Stock Market

15 Jul

Investors have a slew of gloomy news to digest today, and comments from Federal Reserve Chairman Ben Bernanke didn’t help things.

“The possibility of higher energy prices, tighter credit conditions, and a still-deeper contraction in housing markets all represent significant downside risks to the outlook for growth,” Bernanke said in a speech to the Senate Banking Committee this morning. “At the same time, upside risks to the inflation outlook have intensified lately.”

Inflation “seems likely to move temporarily higher in the near term,” Bernanke said.

Bernanke also highlighted the problems in the financial markets, which he said remain under “considerable stress.”

“Helping the financial markets to return to more normal functioning will continue to be a top priority of the Federal Reserve,” Bernanke said.

Stocks plunged after Bernanke’s comments were first released but pulled off their lows considerably by midmorning. At 11:55 a.m. ET, the Dow Jones Industrial Average was down 70 points to 10,984. The Nasdaq Composite Index had shed 5 points to 2,207, and the Standard & Poor’s 500 Index had lost 10 points to 1,218.

Stocks bounced back after light, sweet crude oil plunged $6.71 to $138.47 a barrel.

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