Stocks and oil retreated while Treasuries rose and the dollar pared losses after Federal Reserve Chairman Ben S. Bernanke didn’t announce new steps for stimulating growth in the economy.
The Standard & Poor’s 500 Index dropped 1.7 percent to 1,139.79 at 10:12 a.m. in New York. The Stoxx Europe 600 Index lost 2.4 percent as Germany’s DAX Index slid 2.6 percent. Crude oil sank 2.3 percent to $83.36 a barrel. The rise in Treasuries drove yields on 10-year notes down nine basis points to 2.14 percent. The Dollar Index dropped 0.2 percent, trimming its retreat from 0.5 percent.
Stocks fell as Bernanke withheld the same reassurance he offered at last year’s event in Jackson Hole, Wyoming, when discussion of a plan to stimulate the economy through Treasury purchases ignited an eight-month equity rally. The S&P 500 has dropped more than 16 percent since reaching its 2011 high in April as reports on U.S. employment, housing and manufacturing heightened speculation the biggest economy is poised for a recession.
“I’m not surprised the market is a little disappointed,” Michael Shaoul, chairman of Marketfield Asset Management in New York, said in a telephone interview. His firm oversees $1 billion. “This is the correct stance for the Fed to take at this point. I don’t know what more quantitative easing could actually create. The problems that the markets face are not centered in the U.S. right now, they are centered in Europe. I’m happy to get this speech out of the way and concentrate on what really matters.”
Barclays Plc said this month that yields on 10-year Treasuries indicated traders priced in $500 billion to $600 billion of Treasury purchases by the Fed. Citigroup Inc. said current rates can only be justified by more central bank bond buying or assuming the economy will shrink by 2 percent. U.S. gross domestic product increased at a 1 percent annual rate in the second quarter, missing the median economist forecast for a 1.1 percent increase, according to a report today.