NEW YORK, Jan. 17 (Xinhua) -- Wall Street plunged Thursday with the Dow Jones Industrial Average dropping more than 300 points on recession concerns after Bernanke's comment and weak data.
Stocks opened higher but quickly gave up their gains after the Philadelphia Federal Reserve said its survey of regional manufacturing activity registered a negative 20.9 from a revised reading of negative 1.6 in December.
Fed Chairman Ben Bernanke, testifying before the House Budget Committee, warned the risks of an economic downturn have grown more pronounced .
The Commerce Department said Thursday housing starts plunged 14 percent to 1.01 million in December, marking the weakest pace of home building in more than 16 years. In addition, permits to build new homes dropped 8 percent last month to 1.07 million, the lowest level since 1993.
Credit concerns also dogged Wall Street after rating agency Moody's Investors Service placed bond insurer Ambac Assurance Corp. on review for a possible downgrade.
The Dow Jones industrial average was down 306.95 points, or 2.46 percent, to 12,159.21. The Standard & Poor's 500 Index was down39.95 points, or 2.91 percent, to 1,333.25. The Nasdaq Composite Index was down 47.69 points, or 1.99 percent, to 2,346.90.
Merrill Lynch & Co. on Thursday posted a massive loss that underscored the depth of the economy's credit problems. The world's largest brokerage said it lost almost 10 billion U.S. dollars in the fourth quarter, hurt by massive write-downs from investment and trades battered by the ongoing credit crisis. Shares of Merrill fell 10 percent.
Fed chief: downside risks to growth become more pronounced
WASHINGTON, Jan. 17 (Xinhua) -- U.S. Federal Reserve Chairman Ben Bernanke warned Thursday that the downside risks to economic growth have grown more pronounced.
"Recently, incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and that the downside risks to growth have become more pronounced," said Bernanke in testimony to the House Budget Committee.
Bernanke backs temporary fiscal package to stimulate economy
WASHINGTON, Jan. 17 (Xinhua) -- U.S. Federal Reserve Chairman backed on Thursday calls for a fiscal package to stimulate economy, but stressed such a plan should be "explicitly temporary."
"Any program should be explicitly temporary, both to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government's structural budget deficit," said Bernanke in testimony to the House Budget Committee.
Bush embraces calls for economic stimulus package
WASHINGTON, Jan. 17 (Xinhua) -- U.S. President George W. Bush embraces calls for an economic stimulus plan to help avert recession, White House spokesman Tony Fratto said Thursday.
"The president does believe that over the short term, to deal with the softening of the economy, that some boost is necessary," Fratto said.
