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Thursday, June 23, 2011

US Stocks end lower on Bernanke bummer

NEW YORK (CNNMoney) -- U.S. stocks fell Wednesday after the Federal Reserve issued a sour assessment of the economy but gave no indication that additional stimulus measures are in the works.

The Dow Jones industrial average (INDU) fell 80 points, or 0.6%, to 12,109. The S&P 500 (SPX) lost 8 points, or 0.6%, to 1,287. The Nasdaq Composite (COMP) tumbled 18 points, or 0.7%, to 2,669.

Stocks had drifted between small gains and losses throughout the day before the selling picked up steam in the final hour of trading.

In a widely expected move, the Fed held its benchmark interest rate near zero percent, saying the economic recovery has been weaker than expected.

Echoing past statements, the Fed said economic growth remains tepid enough to justify "exceptionally low" interest rates for an "extended period" of time.

"There was was no 'new news' in the Fed's statement today," said Nigel Gault, an economist IHS Global Insight.

The central bank also repeated that its $600 billion stimulus program will end next week, as scheduled. It will continue to use interest earned on its $2.6 trillion portfolio of securities to buy long-term Treasuries.

In his post-statement press conference, Bernanke said the recent economic slowdown is largely due to temporary factors such as supply disruptions from the earthquake in Japan.

But he acknowledged that more long-term problems may be behind the sluggish growth this year.

"We don't have a precise read on why this slower pace of growth is persisting," Bernanke said.

Given the uncertain outlook, Bernanke said the Fed will not act for "at least" another two or three meetings, suggesting that rates will remain low until November.

"It depends on how the economy and economic outlook changes," he added.

Separately, the Fed issued an update to its economic projections. The bankers lowered their target for economic growth and raised their forecast for the unemployment rate.

"Overall, the tenor of today's policy statement and Bernanke's words would best be described as mixed and uncertain," said Guy LeBas, a strategist at Janney Capital Markets. "The markets' response was similarly mixed."

The dollar gained against the British pound, but edged lower versus the euro and Japanese yen.

Oil for August delivery gained $1.24, or 1.3%, to $95.41 a barrel.

Gold futures for August delivery added $8 to $1,554.40 an ounce.

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