FOX Business: The Power the Prosper
A broad rally that was fueled by China's surprise rate cut ran out of steam in late-session action as traders interpreted signs that the Federal Reserve may not be ready to offer additional monetary stimulus.
The Dow Jones Industrial Average climbed 46.2 points, or 0.37%, to 12461, the S&P 500 fell 0.14 point, or 0.01%, to 1315 and the Nasdaq Composite slumped 13.7 points, or 0.48%, to 2831.
The Dow had been up close to 140 points at the highs of the session, only to close out the day with modest gains. Four out of ten S&P 500 sectors ended in the red, led by telecommunications companies. On the other side of the spectrum, utilities posted the best performance.
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.
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.