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Markets Swoon on Bernanke's Inflation Talk

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Markets Swoon on Bernanke's Inflation Talk

Economy

Markets Swoon on Bernanke's Inflation Talk

Markets Swoon on Bernanke's Inflation Talk

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Stocks endure a second day of sharp declines; the Dow Industrials fell nearly 200 points Monday and lost more than 110 points Tuesday before finishing 46 points down.

The dips put the Dow index below 11,000 for the first time since early March; it recovered some losses in the afternoon, closing at 11,002.

Most market analysts agree that prices have fallen because of remarks on controlling inflation by the new Federal Reserve chief, Benjamin Bernanke. Speaking at a bankers conference Monday, Bernanke said there is evidence that the economy is finally beginning to decelerate after a long series of interest rate increases. Consumer spending is slowing, and so is the housing market.

But then Bernanke said that core inflation is reaching levels he considers at the upper range of a healthy economy. He went on to say that the Fed would be vigilant about inflation pressures — which many investors took to mean the central bank will keep raising interest rates.

In Depth

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