China rode to the rescue of US markets yesterday when Federal Reserve Chairman Ben Bernanke let them down.
Bernanke, testifying on Capitol Hill, declined to specify any remedies he has for the ailing US economy — and the Dow Jones industrial average, stoked to rally on any hint of another round of quantitative easing, dropped about 45 points.
“Bernanke threw traders a curve ball,” said market analyst Phil Flynn at PFG Best. “After his vice chair made it seem like [a Fed stimulus] was a foregone conclusion, he really messed people up.”
Luckily for US investors, hours ahead of Bernanke’s appearance before Congress’ Joint Economic Committee, China’s government cut interest rates for the first time since 2008.
The move was made to jump-start the sagging Asian giant’s economy.
China’s two-pronged stimulus package triggered a strong global stock rally, which boosted opening trading in the DJIA by more than 140 points.
Still, the Dow lost most of its gains, ending 46.17 higher at 12,460.96. The Standard & Poor’s 500 Index flattened to end marginally lower at 1,314.99. The Nasdaq lost 13.70 to 2,831.02.
Analysts said China’s moves will boost companies that do business with China.
The package lowered Chinese interest rates by 25 basis points, and also liberalized for the first time in years the pool of huge deposits in Chinese banks, allowing citizens to tap more funds for a new spending spree likely to rival any in the past.