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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Same sad story on stocks: Last hour of trading erases day's gains

Once again, a final-hour sell-off wasted a nice day of solid gains, as stocks plummeted into the red again, despite encouraging economic news from the Fed Reserve and its chairman.

Stocks evidently are unable to tolerate success and could not extend a modest two-day winning streak.

The big loser? Embattled oil giant BP, whose shares hit a 14-year low after trading at four times normal volume. BP closed down a whopping 16 percent at under $30. The company has lost half of its value since the oil spill began in April. Yes, half.

The Dow closed down four-tenths of 1 percent at 9,899.25. The Dow is now down 2.3 percent in June and 5 percent year-to-date.

The broader S&P 500 closed down six-tenths of 1 percent at 1,055.65.

The tech-heavy Nasdaq closed down half of 1 percent at 2,158.85.

Earlier this afternoon, the Fed said that the economic recovery is spreading, albeit slowly, across the country. In testimony before Congress, Fed Chairman Ben Bernanke warned that the United States needs to get its debt house in order or else wind up like Europe, but he largely gave a hopeful picture of the recovery going forward.

Oil closed up nearly 3 percent at almost $74 per barrel, and gold eased back off its historic high hit yesterday, closing down 1 percent about $1,229.

The euro, which played a part in U.S. trading all day, rose slightly but is still selling for less than $1.20.

Stocks were also hurt later in the day by German Chancellor Angela Merkel saying that now is the time for world governments to start withdrawing stimulus.

By Frank Ahrens  |  June 9, 2010; 4:01 PM ET
Categories:  Data , Wall Street  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Bernanke assumes role of very measured chief economic cheerleader
Next: BP stock crashes; oil giant trading below book value


"...but he largely gave a hopeful picture of the recovery going forward."

Hopeful is right. That's why the market went negative. It is no longer buying the hope that the Fed is desperately trying to sell. Bernanke's testimony and today's Beige Book are full of optimism, backed by very little in the way of hard fact.

And why should anyone believe the guy who back in 2007 said that the mortgage problem was confined to sub-prime; who said in 2008 that the economy would not enter recession; who in the fall of 2009 said that the economy had exited the recession; and who now says that private sector demand was ready to drive growth again.

Here's some news from the private sector: housing shadow inventory still huge, and prices falling again; mortgage and credit card defaults still rising; private sector job growth still marginal to flat; rail car loadings declining again, etc.

And to top it off, government debt exploding, with federal debt soon to reach 100% of GDP.

Posted by: Claudius2 | June 9, 2010 4:34 PM | Report abuse

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