July 21 (Bloomberg) -- U.S. stocks slid, while Treasuries and the dollar rallied, as Federal Reserve Chairman Ben S. Bernanke said the economic outlook remains “unusually uncertain” without offering additional measures to stimulate growth. Oil dropped on an unexpected increase in inventories. The Standard & Poor’s 500 Index fell 1.3 percent to 1,069.59 at the 4 p.m. close in New York, halting a two-day advance. The yield on two-year Treasuries sank to a record low for the fourth time in five days and the Dollar Index surged 0.6 percent. Oil slipped below $77 a barrel, while copper rallied 3 percent after Freeport-McMoRan Copper & Gold Inc. said the outlook for the metal is “positive.” Equities slid to their lows of the session as Bernanke said central bankers “remain prepared” to act as needed to aid growth, without providing any specific details. U.S. stocks staged a late-day rally yesterday as investors speculated Bernanke would announce plans today to stimulate the world’s largest economy. “Bernanke didn’t say anything positive,” said Sarah Hunt, research analyst at Alpine Mutual Funds in Purchase, New York. Alpine oversees $6.5 billion. “People were waiting for some, ‘By the way, we’re going to make some announcement that we’re going to fix the world.’” JPMorgan Chase & Co., Bank of America Corp. and Hewlett- Packard Co. lost more that 2.4 percent to help lead the Dow Jones Industrial Average down 109.43 points, or 1.1 percent, to 10,120.53. Yahoo! Inc. slumped 8.5 percent and spurred a retreat in technology and media companies after sales missed analyst estimates on a drop in ad revenue from online searches. Earnings Season U.S. equities opened the session higher after Morgan Stanley, Apple Inc. and Wells Fargo & Co. joined the 83 percent of S&P 500 companies that have beaten the average analyst estimate for second-quarter profit so far in the earnings reporting season, according to data compiled by Bloomberg. The S&P 500 has rallied 4.6 percent from a 10-month low on July 2 amid optimism earnings growth will signal a stabilizing economy. Equities turned lower when Bernanke’s prepared testimony was released at 2 p.m. While Fed officials plan to eventually raise interest rates from almost zero, “we also recognize that the economic outlook remains unusually uncertain,” Bernanke said today in testimony to the Senate Banking Committee. “We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation’s productive potential in a context of price stability.” Speculation Foiled Investors were speculating before the testimony that Bernanke was preparing to announce more stimulus measures, such as cutting the interest paid on excess reserves to spur lending, Mitul Kotecha, Hong Kong-based global head of foreign-exchange strategy at Credit Agricole Corporate & Investment Bank, wrote in a note. “There was some expectation that the Fed would lower the rates they’re paying on excess reserves, and they didn’t,” said Jeffrey Schappe, who oversees $19 billion as chief investment officer at BB&T Asset Management Inc. in Raleigh, North Carolina. “I’d argue there is a need for it, to induce banks to lend.” Two-year Treasury note yields fell 2 basis points to 0.5520 percent, the lowest ever, after previously reaching record lows July 15, 16 and yesterday. Thirty-year bond yields dropped 10 basis points to 3.88 percent and 10-year yields sank eight basis points to 2.88 percent. The Treasury prepared to announce tomorrow a round of two-, five- and seven-year note sales next week that’s forecast to be smaller in size for the third straight month. Oil Slumps, Copper Gains Crude oil for September delivery lost 1.3 percent to $76.58 a barrel in New York after a U.S. Energy Department report showed inventories climbed 360,000 barrels to 353.5 million in the week ended July 16. Copper prices rose the most in five weeks after Freeport- McMoRan Chief Executive Officer Richard Adkerson said markets for copper “are really stronger than economic indicators in the U.S.” Futures for September delivery rose 9.15 cents, or 3 percent, to $3.093 a pound on the Comex in New York. That’s the biggest gain for a most-active contract since June 14. The Stoxx Europe 600 Index rallied 1.2 percent after Fiat SpA returned to a profit and Reckitt Benckiser Plc agreed to buy SSL International Plc., maker of Durex condoms, for $3.9 billion, bringing total deals in Europe to $368 billion this year, 6.8 percent more than the same period in 2009. Global takeovers have reached $1 trillion so far in 2010, 6.5 percent more than at the same time last year, according to data compiled by Bloomberg. Asian, Emerging Markets The MSCI Asia Pacific Index increased 0.2 percent and the MSCI Emerging Markets Index rose for a second day, climbing 1 percent. Benchmark indexes in Russia and Turkey advanced at least 2 percent to lead gains among major developing-nation equity gauges, while benchmark indexes in Poland, the Czech Republic, Hungary and South Africa also rallied more than 1.5 percent. The Dollar Index, which gauges the U.S. currency against six major trading partners, surged 0.6 percent to 83.273. The yen appreciated against all 16 of its major counterparts, rising 0.6 percent against the dollar and climbing 1.4 percent versus the euro. The dollar rose 0.9 percent $1.2768 per euro. German 10-year bonds were little changed, with the yield at 2.63 percent, after the government failed to sell all of the 4 billion euros of 30-year securities it offered. Portugal borrowing costs rose at an auction of 1.253 billion euros of bills due in July 2011. Still, the nation’s 10-year bond yield lost one basis point to 5.42 percent. To contact the reporters on this story: Caroline Dye in New York at [email protected] ; Nikolaj Gammeltoft in New York at [email protected] .
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