US stocks stall as Bernanke signals end of stimulus

NEW YORK (AP) — The stock market managed to steady itself after hearing Federal Reserve Chairman Ben Bernanke’s plans to dismantle the central bank’s supports for the US economy.

The Dow fell 20.26, or 0.2 percent, to 10,038.38 a day after jumping 150 points as hope of a Greece bailout grew.

The broader Standard & Poor’s 500 index fell 2.39, or 0.2 percent, to 1,068.13, while Nasdaq composite index fell 3.00, or 0.1 percent, to 2,147.87

Bernanke revealed the Fed’s thinking on how to wean the market from massive emergency supports put in place to keep the economy afloat. He said the Fed will likely start tightening credit by boosting the interest rate it pays banks on deposits with the central bank.

The talk of a smaller role for the Fed in US markets came as investors looked for the opposite overseas. Investors are hoping European Union countries will extend a bailout to Greece. The country is facing big budget gaps. There is concern that financial woes in Greece as well as in Portugal, Ireland and Spain could spread and threaten a global economic recovery.

“We’re in a messy transition period,” said Paul Ballew, chief economist at Nationwide Insurance in Columbus, Ohio. “While you see policymakers back off in some areas you’re going to continue to see them intervene in other areas.”

Officials said the EU member nations have made no decisions about how to help Greece. The debt problems are the latest setback in the past four weeks that has halted a 10-month advance in stocks.

Investors have also been concerned about China’s plans to curtail economic growth to avoid speculative bubbles and President Barack Obama’s calls to restrict trading at large financial institutions.

The prospect of more restrained Fed shook the markets at first, even though it wasn’t a surprise.

Bernanke said in a statement that the Fed likely will begin tightening credit by raising the interest rate it pays to banks on the money they have deposited at the Fed. That would lead to an increase in borrowing rates for consumers and businesses.