Wall St snaps 4-day advance after Bernanke remarks

NEW YORK Wed Feb 29, 2012 5:09pm EST

Traders work on the floor just before the closing bell at the New York Stock Exchange February 28, 2012. REUTERS/Brendan McDermid

Traders work on the floor just before the closing bell at the New York Stock Exchange February 28, 2012.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - Stocks slipped on Wednesday, snapping a four-day winning streak after comments from U.S. Federal Reserve Chairman Ben Bernanke disappointed investors hoping for a strong signal of more stimulus.

The Fed chairman's comments drove the dollar .DXY up 0.7 percent against a basket of major currencies and sent materials lower. Gold fell 5 percent in late trading. The S&P Materials Index .GSPM lost 1.7 percent, making it the S&P 500's worst-performing sector.

Bernanke offered a tempered view of the U.S. economy, pouring cold water on the notion that recent upbeat signs herald a stronger recovery. But he gave no hint of new asset purchases, which the Fed has used in recent years to boost growth.

"People just viewed him as slightly more hawkish than he has been previously - I would emphasize the word 'slightly,'" said Michael Marrale, managing director and head of sales trading at RBC Capital Markets in New York.

The modest scope of the day's decline indicates investors were inclined to take some profits after a five-month rally that has driven the S&P 500 up 8.6 percent since the end of December.

Stocks registered healthy gains for the month of February, following equally robust gains for January.

Reports suggesting more improvement in the economy curbed the day's losses, however. The Nasdaq briefly topped 3,000 for the first time since mid-December 2000.

The Nasdaq's move follows the Dow's close above 13,000 for the first time since May 2008 on Tuesday, the latest in a string of new milestones for the market, and analysts said traders may have been booking profits after the new highs.

Techs, which drove Tuesday's advance, helped lead the retreat, with the Philadelphia Semiconductor index .SOX down 1.6 percent.

The Dow Jones industrial average .DJI shed 53.05 points, or 0.41 percent, to close at 12,952.07. The Standard & Poor's 500 Index .SPX slipped 6.50 points, or 0.47 percent, to 1,365.68. The Nasdaq Composite Index .IXIC dropped 19.87 points, or 0.67 percent, to 2,966.89.

For the month, the Dow gained 2.5 percent, the S&P 500 rose 4.1 percent and the Nasdaq climbed 5.4 percent.

Analysts warned that the year's rally has come on light volume, noting that hitting new highs could spark selling on technical triggers.

In February, daily volume on the New York Stock Exchange, NYSE Amex and Nasdaq has averaged 6.87 billion shares. Last year, the average daily volume in February was 7.81 billion.

But Wednesday's volume flew in the face of the recent trend, with composite trading volume on the NYSE, NYSE Amex and the Nasdaq at the highest level since December 16 - at 8.3 billion shares.

Among reports that helped to limit losses, the Fed said in its Beige Book that the U.S. economy expanded modestly in January and through mid-February.

Other economic data showed the U.S. economy grew slightly faster than initially thought in the fourth quarter, while the pace of business activity in the U.S. Midwest picked up in February to its highest level in 10 months.

The Chicago Purchasing Managers Index, with improvement in new orders and employment gauges, advanced the perception of a continuing recovery in key U.S. economic sectors.

The Institute for Supply Management's national manufacturing report is due on Thursday.

Among the day's decliners, Lufkin Industries Inc LUFK.O fell 2.3 percent to $79.64 after the seller of oilfield pumping units and power transmission products said it will acquire UK's Zenith Oilfield Technology Ltd for about $127 million in cash.

On the NYSE, decliners led advancers by a ratio of about 2 to 1, while on the Nasdaq, about three stocks fell for every one that rose.

(Reporting by Caroline Valetkevitch; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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Comments (6)
Harry079 wrote:
Yipppppppppppppeeeee!

Yahooooooooooooooooo!

Beanie Weenies for everyone!

Feb 29, 2012 10:15am EST  --  Report as abuse
Dahc wrote:
@Harry079: LOL

This stuff is just so unbelievable now. Its all smoke and mirrors.

Feb 29, 2012 10:19am EST  --  Report as abuse
anarcurt wrote:
It’s nice to see that mark but it’s going to take a lot longer to correct all the damage caused by the Bush Administration.

Feb 29, 2012 10:48am EST  --  Report as abuse
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