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Midday Market Report: Bernanke Hints at an End for QE, Markets Erase Gains


Bernanke's comments made him seem ever so slightly hawkish, and world stocks fell -- terrible news for precious metals investors.

Looks like Federal Reserve Chairman Ben Bernanke is turning off the money tap.

US markets opened high this morning on positive economic data and another round of long-term refinancing operations in Europe. In his testimony before the House Financial Services Committee (with the obligatory campaign sideshow from Ron Paul), Bernanke didn't hint at any further quantitative easing. He said that he sees the labor market continuing to improve, perhaps enough to rule out any need for monetary stimulus.
  • The Dow (^DJI) extended its rise by 0.02% to 13,002.85.
  • The S&P 500 (SPY) is down 0.10% to 1,370.85.
  • The Nasdaq (^IXIC) peaked at just a hair above 3,000 for the first time since 2000 before falling back in retreat. The tech-laden index is down 0.04% at 2,985.65.
European stocks also erased earlier gains after Bernanke's comments. Most benchmark indices declined.
  • The Eurostoxx 50 (^STOXX50E) fell 0.30%, closing the day at 2,512.11.
  • The FTSE 100 (^FTSE) dropped 0.95% to 5,871.51.
  • Germany's DAX (^GDAXI) went down 0.46% to 6,856.08.
  • France's CAC (^FCHI) ticked down 0.04%, closing at 3,452.45.
A report showed that US crude inventories have reached a five-month high. The data, coupled with diminished hopes of a demand recovery, sent oil futures down for the third straight day. WTI crude for April delivery fell 0.61% to $105.90/barrel. Energy stocks, down 0.75% as a group, weighed down on the S&P. Exxon Mobil (XOM) lost 0.55%; ConocoPhillips (COP) declined by 0.61%.

When Ron Paul was chastising Bernanke for destroying the dollar, he used a silver coin as a prop. That coin is a pretty bad example of the "preservation of value" that Paul was trying to get across. Precious metals fell off a cliff today. Gold futures dropped 3.32% to $1,729.10/ounce and silver dropped 5% to $35.345/ounce.

Twitter: @vincent_trivett
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