Federal Reserve Chairman Ben Bernanke told
Congress Wednesday regulators are closely watching U.S. markets following
the huge drop in stock prices Tuesday. But U.S. stock markets rebounded
early Wednesday on Bernanke's optimistic assessment of America's economic
outlook for 2007. VOA's Barry Wood reports.
The global sell-off
continued in Asia -- with the exception of mainland China -- and Europe
before Wall Street rebounded in early trading.
investors took heart from upbeat congressional testimony by Federal
Reserve Board Chairman Ben Bernanke.
He told legislators U.S. economic activity remains solid and he saw no
single factor that had contributed to Tuesday's decline.
The New York Stock Exchange dropped more than 416 points Tuesday in the
largest sell-off in five years.
Bernanke noted there is continuing weakness in the U.S. housing sector,
but said even there improvement is likely.
He said, "We believe that if the housing sector begins to stabilize and
if some of the inventory corrections that are still going on in
manufacturing begin to be completed that there is a reasonable chance
that we'll see some strengthening of the economy sometime during the
middle of the year."
Bernanke spoke after the U.S. Commerce Department released a sharp
downward revision of U.S. economic growth to 2.2 percent in the fourth
quarter of 2006. Its earlier growth figure was 3.5 percent. Most
forecasters anticipate U.S. economy to grow at two and a half to three
percent this year.
Some financial analysts had said the rising stock markets around the
globe were due for what they call a "correction." They attributed
Tuesday's precipitous sell-off to a number of factors, including a sharp
drop on the Shanghai stock exchange and an earlier statement by Bernanke's
predecessor, Alan Greenspan, that the U.S. economy is heading for a