Losses on Wall Street deepen

Stocks have moved sharply lower into the last hour on Wall Street, with the Dow Jones headed for its worst day of the year so far.

After trading steeply down for most of the day, things got even more ugly for the Dow towards the end of the New York trading session, with the benchmark index down nearly 400 points at 14,773, a fall of more than 2%, with every component in the index trading down.

The S&P 500 and the NASDAQ 100 also fell to the day’s lows.

There was nothing out of the blue in Ben Bernanke’s comments yesterday, but the cold reality of facing up to the prospect of an eventual end to stimulus has shaken the market. What we’re seeing is a correction as participants adjust to how they now see the terrain unfolding, with Mr Bernanke’s view being a little less dovish than we have come to expect.

With today’s positive economic reports being ignored by traders, it will be interesting to see how long it takes the market to wean itself off its need for stimulus and start to respond to improvements in the underlying fundamentals of the economy.

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