Stocks recover from early bear-market plunge
Ben S. Bernanke's suggestion that the Federal Reserve could take further measures to help the economy helped stocks recover from an early-morning plunge.
In early trading the broad Standard & Poor's 500 index fell into bear-market territory, which is defined as a 20% drop from the recent highs reached in late April. By midday the S&P 500 had recovered most of its losses for the day and was hovering just above the bear-market threshold, 1090.89. The index was recently trading down 4.49 points or 0.4%, at 1094.74.
The Dow Jones industrial average saw less recovery from the early-morning drop, and was recently trading down 107.50 or 1.0%, at 10547.80.
The declines come a day after U.S. stocks closed at their lowest levels in a year.
Stocks fell early Tuesday after European finance ministers indicated that they may be preparing to restructure a Greek bailout plan and force investors to take bigger losses. Leading indexes finished the day down 3.0% in Germany and 2.6% in England.
Just as the trading day in Europe was drawing to a close, Bernanke, chairman of the Fed, testified before Congress that the central bank "is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability."
Bernanke warned Congress that its efforts to cut government budgets too quickly could worsen the economic situation.
The comments did not help gold, which resumed its recent slide, falling $41.30 to $1,614.70 an ounce in futures trading.
-- Nathaniel Popper