US stocks-Indexes fall as rate cut hopes fade
US stocks fell on Tuesday after Federal Reserve Chairman Ben Bernanke said inflation risks remain to the upside.business Updated: Jun 05, 2007 19:52 IST
US stocks fell on Tuesday after Federal Reserve Chairman Ben Bernanke said inflation risks remain to the upside, suggesting equity investors should not count on an interest rate cut spurring stocks higher in the near future.
Weighing down the Nasdaq index were shares of Bed Bath & Beyond Inc after the home goods retailer warned late on Monday that it sees the first-quarter profit below Wall Street forecasts.
The Institute for Supply Management's nonmanufacturing index for May is scheduled for release at 10 am (1400 GMT). The indicator is a key measure of the health of the vast US services sector. Economists forecast the index dipped to 55.3 in May from 56 in April.
The Fed chief said the economy is set to grow at a sluggish pace in coming months, but he warned risks of elevated levels of inflation, excluding food and energy, may not recede.
He is "essentially telling us nothing is going to happen from the Fed for a long time," said Robert MacIntosh, chief economist at Eaton Vance Management in Boston.
The Dow Jones industrial average was down 61.52 points, or 0.45 per cent, at 13,614.80. The Standard & Poor's 500 Index was down 6.33 points, or 0.41 per cent, at 1,532.85. The Nasdaq Composite Index was down 9.53 points, or 0.36 per cent, at 2,608.76.
Among the latest in deals was a buyout of telephone equipment company Avaya Inc by private equity firms TPG Capital and Silver Lake for $8.2 billion, sending Avaya shares up about 2.3 per cent to $17.11 on the NYSE. For details, see.
Bed Bath & Beyond shares fell 5.7 per cent to $38.16 on the Nasdaq.