U.S. stocks fell, after the biggest gain in two weeks for benchmark gauges, as Federal Reserve Chairman Ben S. Bernanke disappointed investors by not detailing new plans to boost growth in the world’s largest economy.
Financial and industrial shares had the biggest losses among 10 groups in the Standard & Poor’s 500 Index. JPMorgan Chase & Co. (JPM), Boeing Co. (BA) and DuPont Co. retreated at least 2.1 percent, pacing declines in companies most-tied to economic growth. Dollar General Corp. (DG) tumbled 5.7 percent after the company said holders will sell 25 million shares.
The S&P 500 fell 1.1 percent to 1,185.90 at 4 p.m. in New York as all 10 of its groups declined. The Dow Jones Industrial Average slid 119.05 points, or 1 percent, to 11,295.81. Stocks extended losses as Bernanke stopped short of signaling what he thinks is the Fed’s best option to aid the economy, repeating points from his speech on Aug. 26 in Jackson Hole, Wyoming.
“People wanted some sort of announcement that they could rely on and say -- OK, that’s specifically what the Fed is going to do,” Wasif Latif, vice president of equity investments at USAA Investment Management Co. in San Antonio, which oversees about $50 billion, said in a telephone interview. “You didn’t get the substance. Until we get clarity, the market will continue to gyrate back and forth. This manic-depressive market activity will probably continue.”
Benchmark gauges yesterday had the biggest gain since Aug. 23, as investors speculated that President Barack Obama’s plan to inject more than $300 billion into the economy will bolster growth. Obama plans to unveil his proposals for promoting job growth in an address to a joint session of Congress later today.
‘Sustainable Trajectory’
While Bernanke said Congress and Obama must put the federal government’s finances on a “sustainable trajectory” over the long term, he warned that policy makers should not disregard the “fragility” of the economic recovery.
The Fed chief also said policy makers will discuss the tools they could use to boost the recovery at their next meeting this month and stand ready to use them if necessary. Policy makers “are prepared to employ these tools as appropriate to promote a stronger economic recovery in the context of price stability,” he said in the text of a speech to economists in Minneapolis.
U.S. stock futures dropped earlier as European Central Bank President Jean-Claude Trichet resisted calls to lower interest rates even after “downside risks” to the euro area intensified. The economy faces “particularly high uncertainty,” Trichet said at a press conference in Frankfurt today. The ECB cut its growth forecasts for this year and next.
‘Wheelchair’
“This market is looking for assistance and what it wants is a wheelchair and someone to push it,” Burt White, who helps oversee $330 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “People are hoping that central banks will deliver that.”
Stocks also fell today as claims for U.S. unemployment benefits rose last week, a sign the labor market is struggling to gain traction more than two years after the recession ended.
The Morgan Stanley Cyclical Index of companies whose earnings are most-dependent on economic growth dropped 2.2 percent. The Dow Jones Transportation Average, also a proxy for the economy, lost 1.3 percent. The KBW Bank Index of 24 stocks slumped 2.7 percent.
JPMorgan fell 3.8 percent to $33.51. Boeing declined 3.2 percent to $62.81. DuPont retreated 2.2 percent to $46.40.
Dollar General
Dollar General lost 5.7 percent to $35. The dollar store chain said in a regulatory filing that holders will sell 25 million shares. The Goodlettsville, Tennessee-based company won’t receive any proceeds from the sale.
Pall Corp. (PLL) fell 9.8 percent to $44.03, the biggest decline in the S&P 500. The supplier of filters for drugmakers and refineries said fourth-quarter profit was 76 cents a share, excluding some items. Analysts on average estimated 88 cents a share, according to a Bloomberg survey.
Yahoo! Inc. rose 6.1 percent, the most in the S&P 500, to $14.44. Third Point LLC bought a 5.2 percent stake and urged the board to resign, saying directors erred in spurning takeover bids and hired a chief executive officer who wasn’t up to the job.
Yahoo Chairman Roy Bostock fired CEO Carol Bartz by telephone on Sept. 6, a decision that left investors and analysts questioning the company’s future strategy. Bartz was hired to help Yahoo reinvigorate the Web portal’s sales growth and stock price, following a decision in 2008 to reject a $47.5 billion offer from Microsoft Corp.
“Yahoo’s current board of directors has made a number of decisions that have directly harmed the company and resulted in a stock price far below the company’s intrinsic value,” Third Point, a New York investment firm, said today in a filing.
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