Stocks take another dive

When the chairman of the Federal Reserve testifies on Capitol Hill and strongly hints of more interest rate cuts, investors normally start buying. Not today. Ben Bernanke told lawmakers that the central bank would "stand ready to take substantive additional action as needed to support growth," but there's just too much bad news - and too many signs of a recession - for Wall Street to pay attention. Instead, the Dow is down more than 300 points, the third straight day of declines (frankly, the markets have been in deep distress since the beginning of the year). There was the big Merrill Lynch writedown, of course, but everybody was expected that. What they weren't expecting was a survey of Philadelphia-area manufacturers that contracted much more than expected. Philadephia? Well, a similar drop in the index occurred in early 2001, just before the onset of the last recession. "Basically every day now, you have more and more investors leaning toward the camp that yes, this is going to be a recession, and it could be a severe one," David Kovacs, a quantitative investment strategist at Turner Investment Partners in Berwyn, Pa., told the NYT. And investors are pretty much pooh-poohing a fiscal stimulus package that the brain trusts in Washington are now first considering.

“By the time they actually pass anything, it will be past the time we need it,” said James Paulsen, a strategist at Wells Capital Management, who echoed some of the skepticism on Wall Street about the plan. Other analysts said the chairman was leaning on the government in lieu of aggressively cutting rates. “The market is frustrated with Bernanke,” Mr. Kovacs said. “Bernanke said it would be nice to have an economic stimulus package to help him with his fight. You didn’t see Greenspan asking for help.”