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US stocks retreat on Fed exit concern

(Xinhua)
Updated: 2010-02-11 05:53

NEW YORK: US stocks retreated on Wednesday as concerns about Fed's exit strategy offset reports on possible Greece debt rescue.

Stocks pared some of early losses after French newspaper Le Monde reported that France and Germany were set to present a plan at a European Union summit on Thursday in a bid to prevent Greece from going bankrupt.

The market opened basically flat on Wednesday, with major averages trading in a narrow range around the natural line, after the Commerce Department said that US trade deficit surged to a larger-than-expected $40.18 billion in December as a rebounding economy pushed up demand for imports.

Stocks fell deeper after Fed chairman Bernanke outlined in written testimony how the central bank will tighten credit in the future. Although the testimony has nothing new about the details of Fed's plan to tighten the credit control, it still unnerved the market by listing a series of unpleasant truths that the market was not eager to hear.

Wednesday's move came after US stocks rallied sharply in the previous session as investor expected that Thursday's meeting of European Union leaders in Brussels will agree some sort of financial support for Greece. Officials said the EU hasn't yet decided whether to give assistance to the debt-troubled countries, however German's recent attitude gave investors more reason to believe there is a relief package on the way.

The Dow Jones fell 20.26, or 0.20 percent, to 10,038.38.

The Standard & Poor's 500 index dropped 2.39, or 0.22 percent, to 1, 068.13.

The Nasdaq lost 3.00, or 0.14 percent, to 2,147.87.