This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The 5 Dumbest Things on Wall Street This Week: May 24

1. Bernanke Bonanza

Forget fundamentals. Stocks now run on "Ben"-damentals. Or "Fed"-damentals.

Or whatever stupid name you want to call the wackiness that consumed traders on Wednesday.

Traders started Wednesday in a sublime mood, bidding up equities on the heels of Federal Reserve Chairman Ben Bernanke's prepared statements ahead of his appearance before Congress. In the text of his testimony, which built on similar comments made by St. Louis Federal Bank President James Bullard the previous day, Bernanke said he remains supportive of current monetary policy, arguing that pulling-back on the bank's stimulus measures wouldn't be prudent.

"A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," read Bernanke.

Translation: Party on dudes! Tap another keg David Tepper, because you're old buddy Ben ain't done easing just yet.

Well, at least that was the market's read until around 10:30 a.m., when the S&P 500 abruptly fell from its record high of 1687.

Why did traders turn tail and start selling at that particular time? What changed? Was it an earnings report from a Dow component? An exogenous Middle East event perhaps?

Nah. It was just Bernanke getting peppered by lawmakers about the pace of his $85 billion a month bond buying binge. And when Ben said he could conceivably curb QE within the next few meetings if the job market shows "real and sustainable progress," the unabashed buyers turned into slam-the-bid sellers.

Yes, all it took was a few hypothetical words from gentle Ben in Washington to scare the stuffing out of all those big, bad bulls on Wall Street.

But that wasn't all. Bernanke may have spooked the cattle, but his friends at the Fed really started the stampede. Once the Federal Reserve's minutes from its latest policy-making meeting were released at 2:00 p.m. on Wednesday, the selloff gained momentum on word that that a few Fed members were willing to scale back on monetary stimulus as soon as June. The S&P, which was up around 1% before Ben's 10:30am jolt, finished down 1% on the day.

"A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome," the minutes said.

Translation: Crap! Ditch the beer guys. My parents just called. I'm not exactly sure when, but they are coming home much sooner than I thought. Worst of all, they are bringing along Nouriel Roubini and there's nothing we can do about it.

Well, at least not until Ben Bernanke opens his mouth at his next public appearance on June 19th. Then we'll all have a clue what to do next.

-- Written by Gregg Greenberg in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
5 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $123.25 0.00%
ANF $21.72 0.00%
JPM $59.55 0.00%
NWS $15.95 0.00%
YHOO $45.10 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs