FOX Business: The Power the Prosper
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A rally that was fueled by China's surprise rate cut lost much of its momentum in late action as traders interpreted signs that central banks in America and Europe may not be ready to enact more stimulus measures.
As of 3:40 p.m. ET, the Dow Jones Industrial Average jumped 53 points, or 0.43%, to 12468, the S&P 500 climbed 0.87 point, or 0.07%, to 1316 and the Nasdaq Composite fell 11.3 points, or 0.4%, to 2833.
The Dow and S&P 500 both had their best performance of the year on Wednesday amid hopes central bankers will unleash fresh stimulus in the form of quantitative easing or rate cuts. On the European front, the European Central Bank and Bank of England both held their monetary policy steady following their meetings this week. However, the cut from China, the world's second-biggest economy, helped keep the bullish sentiment alive.
The People's Bank of China cut its benchmark lending and deposit rates by 0.25-percentage point in the hopes of keeping the economic expansion there from cooling down too quickly. Additionally, the PBOC said that it will allow the deposit rate to climb by 110% of the benchmark and the lending rate fall to 80% of the benchmark.
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This comes as some economists have worried that the economy is in for so-called "hard landing" that could be damaging to many global economies because of China's size.
Federal Reserve Chairman Ben Bernanke testified before the Congressional Joint Economic Committee. In his prepared testimony, he said that the economy may not be growing sufficiently to support the rate of job growth the central bank is looking for. However, he came short of hinting at further action from the Fed. He also said the financial crisis in Europe is causing additional strains on the financial system and that the Fed "remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate."
Wall Street also got fresh data on the labor market. New claims for unemployment benefits fell to 377,000 last week, as expected, from an upwardly revised 389,000 the week prior, the Labor Department reported. Claims for the week prior were originally reported at 383,000.
Oil prices initially posted big gains on the China move, but then pulled back in morning trading. The benchmark contract traded in New York dipped 13 cents, or 0.13%, to $84.91 a barrel. Wholesale New York Harbor gasoline slid 0.49% to $2.68 a gallon.
In metals, gold tumbled $45.00, or 2.8%, to $1,589 a troy ounce.
The Euro Stoxx 50 rose 0.25% to 2143, the English FTSE 100 rallied 1.2% to 5447 and the German DAX gained 0.82% to 6144.
In Asia, the Japanese Nikkei 225 climbed 1.2% to 8640 and the Chinese Hang Seng rose 0.85% to 18678.