US economy outlook remains 'uncertain'

in Interest-rate

U.S. stocks fell sharply Wednesday after Federal Reserve Chairman Ben Bernanke warned that the US economic outlook "unusually uncertain" but avoided naming any new steps to jump-start growth, and after mixed earnings results from Yahoo Inc., Coca-Cola Co. and others. In testimony before the Senate Banking Committee, Mr Bernanke said record low interest rates would still be needed to support economic recovery.


The Dow Jones Industrial Average  (DJIA 10,120, -109.74, -1.07%) closed with a loss of 109.43 points, or 1.1%, to 10,120.53, with all but four of its 30 components losing ground.


After two days of gains, the major U.S. stock indexes had blown hot and cold before the decisive slide that came with the testimony of Bernanke on Capitol Hill. The Fed was also prepared to step in with "further policy actions" to boost the economy if needed. However, the US could re-enter recession.


Some economists have questioned whether a withdrawal of economic stimulus measures could harm the US economy's recovery. 


On the Dow, big-bank stocks led losses, with J.P. Morgan Chase & Co.  (JPM 38.49, +0.07, +0.18%) and Bank of America Corp., (BAC 13.39, +0.03, +0.23%) shares sinking at least 3%. Coca-Cola (KO 54.08, +0.84, +1.58%) , its shares up 1.6% after the world's biggest drinks maker reported selling more soft drinks and juices in every part of the globe other than Europe during the second quarter.


The Nasdaq Composite Index  (COMP 2,187, -35.16, -1.58%) dropped 35.16 points, or 1.6%, to 2,187.33. The S&P 500 Index (SPX 1,070, -13.89, -1.28%) was down13.89 points, or 1.3%, to 1,069.59, with consumer discretionary and financials fronting declines that extended to all 10 of its industry groups.


The head of the US central bank reiterated an earlier pledge to keep interest rates at their current historical lows for "an extended period".


Interest rates have been held at between 0% and 0.25% - a move designed to boost lending and spending - since the depths of the financial crisis in 2008. The US economy grew at an annualised rate of 2.7% in the first quarter of the year, having emerged from recession last year.


However, high unemployment and a slowdown in manufacturing have raised concerns that the recovery is faltering.

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Marc Marseille has 335 articles online and 15 fans

I am the economic expert and analyze the economic situations in the world. Currently, I often address lectures on economic solutions to students and supply advice for companies and firms.

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US economy outlook remains 'uncertain'

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This article was published on 2010/07/22