By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stock indexes erased gains Wednesday after Federal Reserve Chairman Ben Bernanke’s testimony to Congress curbed the expectation of additional quantitative easing.
Bernanke said that keeping monetary stimulus is warranted, but climbing energy costs would likely hike inflation temporarily and that the decline in the jobless rate had been more rapid than expected. Read more about Bernanke’s testimony.
Up 2.8% for the nearly ended month, the Dow Jones Industrial Average DJI -0.34% fell 27.25 points, or 0.2%, to 12,977.87.
Twenty of the Dow’s 30 components declined, led by insurer Travelers Companies Inc. TRV -1.07%
The S&P 500 Index SPX -0.30% rose 5.16 points, or 0.2%, to 1,377.34, with natural-resource companies down the most among its 10 industry groups.
The Nasdaq Composite COMP -0.25% added 5.78 points, or 0.2%, to 2,980.98.
Ahead of the Fed chairman’s appearance, U.S. stocks had risen modestly, lifting the Nasdaq briefly above 3,000 for the first time since late 2000, after the U.S. economy grew more than expected and worry about Europe’s financial troubles ebbed. Read more about Nasdaq’s moves in Tech Stocks.
“It’s a move in the right direction,” said Art Hogan, strategist at Lazard Capital Markets, of the Commerce Department’s upward GDP revision to 3% from an initial reading of 2.8%.
But a major driver in the market stemmed from the ECB’s allocation of 529 billion euros ($713.4 billion) in its second auction of three-year loans to the banking sector. The number was slightly higher than some analysts expected, but not so high that it stoked worries about stresses on the banks.
“The ECB seems to have a real game plan here, the second tranche of the LTRO is right in line with credible expectations that should keep the liquidity crisis at bay,” said Hogan. Read more on ECB's LTRO operation.
Stock gains were supported after the open by a gauge of business activity in the Chicago area rising more than expected in February.
For every three stocks gaining ground more than four fell on the New York Stock Exchange, where 235 million shares traded as of 11:15 p.m. Eastern.
