Bernanke also spoke today and said economic and job growth will be slow in 2011.
The Greek crisis goes on and on...
Here are the top financial stories of the day:
1) Wall Street falls after 4 up days on Fed's comments-From Reuters
Stocks dropped on Wednesday after the Federal Reserve acknowledged the sluggish pace of the U.S. economic recovery without hinting at further plans for stimulus.
The Fed said the recovery was proceeding more slowly than it had expected. In his news conference, Fed
Chairman Ben Bernanke offered nothing to motivate investors to buy equities.
Without new information from the Fed, investors were left to take profits after a four-day rally that lifted stocks from three-month lows. Some analysts see range-bound trading ahead, with 1,295 among the S&P 500's first targets of resistance.
"The comments offered a pretty strong indication that the economy is not growing as fast as a lot of people hoped it would," said Bryant Evans, investment advisor and portfolio manager of Cozad Asset Management, in Champaign, Illinois.
"For three months, we could go sideways or down because it could take some time before the economy can build on what we have here."
Expectations about a second round of Fed stimulus last fall helped ignite an extended rally in stocks. There is some hope the Fed will conduct another round of asset buying, but most economists see it as unlikely at this time.
The Dow Jones industrial average (DJI:^DJI - News) slid 80.34 points, or 0.66 percent, to 12,109.67 at the close. The Standard & Poor's 500 Index (^SPX - News) dropped 8.38 points, or 0.65 percent, to 1,287.14. The Nasdaq Composite Index (Nasdaq:^IXIC - News) tumbled 18.07 points, or 0.67 percent, to 2,669.19.
The S&P 500 is down 5.6 percent since its early May highs.
2)Fed dims outlook for jobs and growth for 2011-From the AP
Federal Reserve officials are more pessimistic about prospects for economic growth and employment than they were two months ago.
In an updated forecast, the Fed estimated Wednesday that the economy will grow between 2.7 percent and 2.9 percent this year. That's down from its April estimate of between 3.1 percent and 3.3 percent. The downgraded revision is an acknowledgement that the economy has slowed, in part because consumers have been squeezed by higher gasoline prices.
Growth at the rate the Fed is projecting won't be enough to significantly lower unemployment, now at 9.1 percent. The Fed estimates that unemployment will still be around 8.6 percent to 8.9 percent by the end of the year.
The Fed's downward revisions were in line with private economists, who have also been scaling back their forecasts to reflect a batch of weaker-than-expected reports in recent weeks. The latest poll of top economists surveyed by The Associated Press showed they expect the unemployment rate will be 8.7 percent at year's end, within the Fed's new estimate, and that the economy will grow 2.6 percent this year.
Growth would need to pick up in the second half of this year to meet even the reduced estimates of the private economists and the Federal Reserve. The economy grew at an anemic 1.8 percent annual rate in the first three months of the year. Many economists believe the economy is expanding only slightly more in the current quarter.
The Fed trimmed the top range for overall inflation in the new forecast. That reflects the fact that the spike in energy prices earlier this year has begun to recede.
The central bank now sees inflation rising 2.3 percent to 2.5 percent this year, as measured by a price gauge tied to consumer spending. That compares with an April forecast that showed a higher upper range of 2.8 percent.
The Fed estimates that "core" inflation, which excludes energy and food, will increase 1.5 percent to 1.8 percent. That's slightly higher than its April forecast of an increase of 1.3 percent to 1.6 percent. The revised estimate is still within the Fed's comfort zone for inflation.
Economists closely watch core inflation, because food and energy prices are volatile.
3) Euro-Zone Governments Start Greece Talks With Banks-From The Wall Street Journal
European governments have begun sounding out their banks on ways to share the burden of the latest bailout package for Greece.
In both Germany and France, finance-ministry officials met representatives of their respective countries' leading banks and insurers on Wednesday to discuss how a possible rollover of Greece's debts could work, people familiar with the matter said.
German officials held private, informal talks with bankers in Frankfurt to discuss a voluntary participation in the planned Greek aid package, these people said. Meanwhile French officials held talks in Paris with their countries' leading financial institutions. Similar consultations have started with financial institutions in the Netherlands, according to a person familiar with the matter.
No decisions on the method for involving banks in the Greek bailout are expected before a planned July 3 meeting of euro-zone finance ministers, when governments are hoping to come to an agreement on the best way to proceed.
Latest figures from the Bank for International Settlements show that France's banking sector has the largest overall exposure to Greece, totaling $56.7 billion, compared with German banks' considerably lower exposure of $33.97 billion. But in terms of sovereign debt exposure, French banks have $14 billion, significantly lower than the $22.65 billion held by German banks.
Quote of the Day from Dave Ramsey.com:
Are you bored with life? Then throw yourself into some work you believe in with all your heart, live for it, die for it, and you will find happiness that you had thought could never be yours. — Dale Carnegie
No comments:
Post a Comment