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By Jennifer Yousfi
A fresh round of comments from U.S. Federal Reserve officials acknowledged weakness in the U.S. economy and sent stocks tumbling today (Tuesday).
At noon ET, the three major U.S. stock indices had all posted losses. The blue-chip Dow Jones Industrial Average Index had a 177.15-poing decline (-1.45%), to trade at 12,081.75. The tech-laden Nasdaq Composite Index slumped 29.60 points (-1.31%), to reach 2,229.00. And the broader Standard & Poor's 500 Index decreased 18.63 points (-1.40%), to settle at 1,312.71.
Speaking before the Society of Business Economists in London, Dallas Federal Reserve President Richard W. Fisher predicted U.S. economic growth would remain "sub par" and his forecast is one of the most "bearish" of all the Federal Open Market Committee members.
Fed Vice Chairman Donald Kohn acknowledged "challenging market conditions" in the U.S. banking sector and forecasted additional write-downs in testimony before the Senate Banking Committee.
The consumer cyclical (-2.15%), energy (-2.32%) and financial (-1.96%) sectors were all down. The only sector to post a gain at midday was the utilities sector, up a scant 0.09%.
Shares of Citigroup Inc. (C) fell to their lowest level in almost a decade, dragging other financial shares lower, after Merrill Lynch & Co. Inc. (MER) and Goldman Sachs Group Inc. (GS) both reduced analyst expectations for the bank.
"People get spooked when you have the Federal Reserve still talking about the weakness in the economy and banks' mortgage exposure," Michael Mullaney, who helps manage about $10 billion at Boston-based Fiduciary Trust Co., told Bloomberg News. "It's a little bit scary at this juncture to step up and actually try to buy some stocks."
In overseas markets, Japan's Nikkei Index was closed flat with a 0.10-point gain to reach 12,992.28. Hong Kong's blue-chip Hang Seng Index plunged 465.10 points to close at 23,119.87.
At midday, the dollar had lost ground against the euro [down 0.302%], the yen [down .494%] and the pound sterling [down 0.222%].
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