Markets closed down on Wall Street today: Dow -1.04%, S&P -1.07%, Nasdaq -0.78%, Oil -0.58%, Gold +2.86%.
Today’s markets were down because:
1) Bernanke. Again failing to instill much confidence in the state of economic recovery, or to announce new policy that might get the recovery back on track, Federal Reserve Chairman Ben Bernanke’s speech today had a depressing effect on both investors and the market. While some took his saying that inflation would be in check in coming quarters as evidence that the Fed might be considering a third round of quantitative easing, Bernanke’s speech contained no allusions to any new policies, though the Fed will still meet later this month to discuss whether there is anything it can do. Instead, Bernanke urged Congress to focus more on stimulating economic growth rather than cutting spending. He will likely wait to see how Obama’s job-creation package, to be outlined in a national address this evening, goes over in Congress, and whether it will succeed in boosting jobs.
2) Initial jobless claims. The Department of Labor’s initial jobless claims report for the week ending September 3 was released this morning, showing the number of first-time claims for unemployment benefits climbing by 2,000 from the previous week’s revised figure of 412,000. Initial jobless claims have remained above the 400K, the point that divides expansion and contraction in the jobs market, for 21 of the last 22 weeks. Furthermore, the four-week moving average, which is considered a more accurate gauge of employment trends increased last week for the third consecutive week.
3) Bank of America. Though BofA is denying the allegations, media have cited inside sources claiming the bank will close 600 branches as part of CEO Brian Moynihan’s “Project New BAC”, in which he also plans to split the company’s banking operations in two, separating consumer from commercial units. Confidence that the bank’s CEO knows what he’s doing or has any solid plans to improve operations is waning, and the news that it may have to close branches all over the country didn’t help. Bank of America shares fell 3.34% today, dragging down the rest of the financial sector with them. JPMorgan (NYSE:JPM) shares declined 3.76%, Citigroup (NYSE:C) fell 3.17%, Goldman Sachs (NYSE:GS) fell 3.13%, Wells Fargo (NYSE:WFC) was down 2.04%, and Morgan Stanley (NYSE:MS) dropped 2.88%.