The good news? Ben Bernanke, chairman of the Federal Reserve, believes the terrible U.S. recession is grinding to a halt and growth will resume later this year. The bad news? The recovery will be slow.
While that assessment would have been enough to send stock markets soaring a couple of months ago, when it seemed as though the U.S. economy was teetering on the edge of the abyss, these are different times. The stock market has already discounted a retreat from the abyss, and some observers believe it has begun to price in a decent recovery now that the S&P 500 has bounced about 35 per cent above its 12-year low in early March.
In other words, investors merely shrugged off Mr. Bernanke's upbeat assessment on the economy, leaving stocks down slightly for the day after a strong rally on Monday.
The Dow Jones industrial average closed at 8410.65, down 16.09 points or 0.2 per cent. The broader S&P 500 closed at 903.80, down 3.44 points or 0.4 per cent - within a breath of where it began the year.
Intel Corp. fell 3 per cent and Procter & Gamble fell 2.4 per cent. As well, money management firm Legg Mason Inc. fell 17.3 per cent after it reported a wider-than-expected loss in its quarterly results and cut its dividend. However, Kraft Foods Inc. rose 4 per cent after investors applauded the company's first quarter results.
Financials were mixed, as investors await the results of government stress tests, due to be released on Thursday. Bank of America Corp. rose 4.4 per cent but JPMorgan Chase & Co. fell 2.7 per cent.
In Canada, the S&P/TSX composite index closed at 9880.72, up 10.35 points or 0.1 per cent.
Financials were generally strong, with some of the higher-yielding names reporting the best gains. Bank of Montreal , the bank deemed most likely to trim its dividend during the worst stretch of the bear market earlier this year, rose 4.3 per cent. At the other end of the spectrum, Royal Bank of Canada rose just 0.4 per cent.
Linamar Corp. surged 39.4 per cent after the auto parts maker reported a smaller-than-expected loss for its quarterly results.
However, energy stocks were weak after the price of oil retreated below $54 (U.S.) a barrel, down 63 cents. Suncor Energy Inc. fell 1.4 per cent and Canadian Oil Sands Trust fell 2 per cent.