Wall Street was lower in early afternoon trade on Wednesday after Federal Reserve chairman Ben Bernanke made worrying remarks in testimony before Congress and as brokerages took losses after a downgrade of the biggest names in the sector.
The Dow Jones Industrial Average was 0.72 percent lower to 13,871, while the Nasdaq Composite dropped 1.02 percent and the S&P 500 fell 0.65 percent to 1,539.34.
An analyst at Punk Ziegel & Co downgraded the top five brokerages from “market perform” to “sell” after Bear Stearns (NYSE: BSC) said that two of its hedge funds holding subprime mortgage assets have lost almost everything.
Bear Stearns dropped $2.12 to $137.79, while Lehman Brothers (NYSE: LEH) was 2.31 percent lower to $70.75, Morgan Stanley (NYSE: MS) fell $2.71 to $70.14, Merrill Lynch (NYSE: MER: TYO: 8675) was down $3.30 to $82.90, and Goldman Sachs (NYSE: GS) fell $6.55 to $212.85.
Meanwhile, Mr. Bernanke’s comments in his testimony before Congress were full of concern about inflation and the state of the housing market, culminating in a lower forecast for US economic growth this year and next.
Among housebuilders, Pulte Homes (NYSE: PHM) dropped 3.8 percent to $21.85 after it predicted losses in the second quarter.
In the pharmaceuticals sector, Pfizer (NYSE: PFE) was 4.6 percent lower to $24.78 after both earnings and revenues were lower than had been anticipated.
In the internet sector, Yahoo (NAS: YHOO) was down $1.37 to $26.16 after its second quarter results were about as expected but it lowered its guidance for the third quarter.
Intel (NAS: INTC; SEHK: 4335) dropped $1.32 to $25.01 even though quarterly earnings were better than had been anticipated but gross margins were reported to have dropped.