Stephen Bernard, AP Business Writer, On Wednesday July 21, 2010, 4:15 pm

NEW YORK (AP) — Stocks have closed sharply lower after Federal Reserve Chairman Ben Bernanke confirmed investors’ fears that the economy has weakened. And interest rates are down sharply in the Treasury market as investors sought safer places for their money.

Bernanke has told a congressional committee Wednesday that the economy is “unusually uncertain.” He said the economy is fragile, but he did not forecast that it would fall back into recession.

According to preliminary calculations, the Dow fell 109.43, or 1.1 percent, to 10,120.53. The broader Standard & Poor’s 500 index fell 13.89, or 1.3 percent, to 1,069.59. The Nasdaq composite index lost 35.16, or 1.6 percent, and fell to 2,187.33.

Two stocks fell for every one that rose on the New York Stock Exchange. Volume came to 1.2 billion shares.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stocks fell sharply Wednesday after Federal Reserve Chairman Ben Bernanke confirmed investors’ fears that the economy has weakened. Interest rates dropped in the Treasury market as investors sought safer places for their money.

Bernanke told a congressional committee that the economy is “unusually uncertain.” He said the economy is fragile, but he did not forecast that it would fall back into recession.

The Dow Jones industrial average, which was modestly higher before Bernanke’s prepared remarks, fell more than 150 points as investors absorbed Bernanke’s assessment of the economy, and his statement that the Fed is ready to take action if the economy worsens.

Bernanke’s comments, part of his semiannual report to Congress, weren’t surprising given the economic reports and corporate earnings numbers released in recent weeks. But they were enough to upset investors who have grown increasingly nervous about the state of the economic recovery. Some investors may have been hoping for a more upbeat reading from the Fed chairman.

The Fed is still expecting the economy to expand this year, but the central bank has lowered its forecast for growth.

Oliver Pursche, executive vice president at Gary Goldberg Financial Services, said investors took Bernanke’s comments as “not exactly a ra-ra USA type of endorsement.”

Investors have been selling stocks since late April on a combination of weak economic indicators and disappointing earnings reports. The Dow, which reached a 2010 high of 11,205.03 on April 26, has fallen 10 percent as investors have seized on any piece of bad news and shrugged off more positive signs about the economy.

In the past few days, companies’ revenue figures have become a culprit. Although companies including IBM Corp. and General Electric Co. have beat analysts’ second-quarter earnings estimates, their revenue has not met expectations and investors have been selling. The belief in the market is that companies aren’t getting the strong sales needed to fuel the economic recovery.

The Dow fell 158.33, or 1.6 percent, to 10,071.63 in late afternoon trading. The broader Standard & Poor’s 500 index fell 17.71, or 1.6 percent, to 1,065.77. The Nasdaq composite index lost 37.61, or 1.7 percent, and fell to 2,184.88.

Treasury prices surged as investors sought out the safety of government debt. The yield on the benchmark 10-year Treasury note, which helps set rates on mortgages and other kinds of loans, fell to 2.91 percent from 2.96 percent late Tuesday.

source: Yahoo finance

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