Stocks dip in busy day ahead of EU Econ Summit

Along the way, U.S. stock market investors digested a flood of economic reports and announcements.

The S&P 500 Index closed down 2.39 points, or 0.22 percent, at 1,068.13. The Dow Jones Industrial Average lost 20.26 points, or 0.20 percent, to close at 10,038.38.

The financial sector performed the best and Wall Street firms generally traded higher. Wells Fargo (NYSE:WFC) led with a gain of 1.76 percent and Morgan Stanley (NYSE:MS) followed with a gain of 1.40 percent.

The yield spread between the bonds of Greece and Germany narrowed today, in-line with expectations that Germany will offer Greece support.

According to the Financial Times, both Germany and France will promise some form of backing for Greece, although details remain unknown.

The European Union Economic Summit, which European Central Bank President Trichet will attend, will be watched closely tomorrow for any definitive announcements about the specifics of the bailout plan.

Outside of continental Europe, it was a busy day for the markets.

Before the U.S. stock market even opened, a flurry of important economic reports were announced. China overtook Germany as the world's number one exporter. The U.K. central bank cut its forecast for GDP. Finally, the U.S. reported a wider than expected deficit on increased petroleum imports.

Investors then digested the comments of Fed Chairman Bernanke, whose written testimony before the House Financial Services Committee was released at 10:00 am.

Bernanke said the Fed will withdraw liquidity at the appropriate time, but added that at present the U.S. economy continues to require the support of highly accommodative monetary policies.

He also highlighted some measures the Fed already took to slowly tighten monetary policy; the number of Federal Reserve lending facilities have decreased and the maximum discount window loan maturity has been decreased to 28 days from 90 days.

Bernanke also warned that before long, he expect[s] to consider a modest increase in the spread between the discount rate and the target federal funds rate.

However, he noted that he expects to leave the federal funds rate at current levels for “an extended period.”

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