UPDATE: Markets originally turned down moderately after Bernanke’s punt, but now they’ve bounced back.
PREVIOUSLY: The Dow off only 0.6% — about where it was before the speech — and the NASDAQ is up 0.6%.
The graph shows where the DJIA is now (10:31 AM ET).
Ben Bernanke failed to reassure markets in his highly anticipated Jackson Hole speech this morning.
While this was not a terrible disappointment, it certainly did not placate investors praying for QE3. Not that this was every very likely.
The Fed remains consistent in its cautiously optimistic approach to the U.S. economy, even while admitting that the most recent numbers don’t look pretty. “Notwithstanding these more positive developments, however, it is clear that the recovery from the crisis has been much less robust than we had hoped,” he said.
Bernanke took aim at politicians’ behaviour during the debt crisis, suggesting that their bickering and indecision poses a serious threat to the economy:
“The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses.”