Stock Market News for December 7, 2010

Stocks paused for a breather, retreating for the first time in four days, as the Federal Reserve chairman’s tepid comments over the weekend and speculation that the central bank would boost its bond-buying program soured sentiments. Bernanke said the stubbornly high unemployment levels would take four to five years to drop to historically normal 5 to 6 percent.  
 
In an interview with CBS that was broadcast over the weekend, the Fed chief said the option to inject more money into the economy was open, but brushed aside claims that the Treasury purchases would boost inflation. Bernanke, however, admitted that the economy was yet to reach a “self-sustaining” level.
 
The Fed chief’s cautious comments ruffled some feathers, sending stock traders on the sidelines, even as signs of consensus on extending Bush-era tax cuts helped stocks pare losses. The Dow Jones industrial average fell 19.90 points, or 0.17%, to 11362.16. The blue-chip average had advanced 2.6% last week.
 
The widely followed Standard & Poor’s 500-stock index fell 1.6 points, or 1223.12. The tech-heavy Nasdaq, however, bucked the trend and advanced 3.64 points, or 0.13%, to 2594.92. On the New York Stock Exchange, the number of advancing stocks was almost equal to falling shares as volume dipped to a light 804 million shares.

Financials weakened on a Nomura report that said rating companies may downgrade the banks early next year as government support weakens and new regulations come into force. The report said Bank of America (NYSE:BAC - Analyst Report) along with Citigroup (NYSE:C - Analyst Report), and Morgan Stanley (NYSE:MS - Analyst Report) are the most at risk. Bank of America (NYSE:BAC - Analyst Report) fell 1.9%. JP Morgan (NYSE:JPM - Analyst Report), however, bucked the trend and rose 0.7%. DJIA component Cisco (NASDAQ:CSCO - Analyst Report) bucked the trend, as well, and rose 1.9% higher, after Oppenheimer upgraded the shares from "perform" to "outperform."

Six of the ten S&P 500 industry sectors moved lower on the day, led by declines in health care (-0.7%), utilities (-0.4%), consumer goods (-0.2%), industrials (-0.1%), financials (-0.1%) and consumer services (-0.04%). Commodity shares led on the upside, led by basic material stocks (+0.4%), oil and gas (+0.3%), technology (+0.1%), and telecommunications (+0.03%).

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Read the full analyst report on C

Read the full analyst report on MS

Read the full analyst report on JPM

Read the full analyst report on CSCO