Federal Reserve Chairman Ben Bernanke testified for a second day in front of Congress, but the real news moving markets higher came from the tech sector. The Dow Jones Industrial Average (INDEX: ^DJI ) gained 103 points, or 0.89%, while the S&P 500 (INDEX: ^GSPC ) gained a still respectable 0.67%. Good earnings from several hardware companies eased fears, sending the tech-heavy Nasdaq (INDEX: ^IXIC ) up 1.12%.
However, the financial sector was the mirror image of tech, as it reported a 0.6% decline. Only five Dow components showed declines today, and unsurprisingly, half of them were financial institutions.
That said, let's take a closer look at the Dow's three worst performers and what dragged them down.
Closing Share Price
|Bank of America (NYSE: BAC )
|American Express (NYSE: AXP )
Source: Yahoo! Finance.
The financial sector's headline decliner was clearly Bank of America, but shockingly, B of A had a fairly decent quarter. Sure, revenue declined, but earnings were $0.19 a share, up from last year's $0.90 loss and $0.04 better than analysts expected. American Express also beat on the bottom line, but slowing top-line growth saw its revenue come in lighter than anticipated. That slowing consumer spending could foreshadow economic weakness.
The financial sell-off also saw fellow Wall Street bank JPMorgan Chase among the Dow's losers, with a minor 0.09% decline for the day. The entire financial sector is desperately waiting for another round of quantitative easing, and despite Bernanke's increased bearishness, that aid may not be forthcoming. While some insist the Fed's cautiousness comes from not wanting to deplete its ammo unless a crisis is upon us, others think the Fed is holding back lest it be accused of trying to affect the presidential election by goosing the economy in the short term.
If the latter is the case, it is an indictment of an institution that should be above considering political ramifications when crafting optimal economic policy. At a time when employment is stuck over 8%, with no serious improvement in sight, inaction is getting increasingly difficult to sell.
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