Oct. 4 (Bloomberg) -- U.S. stocks trimmed losses as the cheapest valuations since 2009 lured equity investors and Federal Reserve Chairman Ben S. Bernanke said the central bank is ready to take additional steps to boost growth.
The Standard & Poor’s 500 Index slipped 0.5 percent to 1,093.71 at 11:20 a.m., returning above the 1,090.888 level that would signal a bear-market drop of 20 percent from its April peak. It plunged as much as 2.2 percent to 1,074.77 earlier. The gauge started today trading at 12 times its companies reported earnings, the lowest level since March 2009.
“We’re really oversold,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $550 billion. “The Fed has indicated that it’s not out of bullets. There’s no sign of recession in the U.S. and yet the market is pricing for one. So you’re going to have days when things pop up and you’re going to have bear market rallies.”
Stocks recovered from their lows of the session as Bernanke said today in testimony to Congress’s Joint Economic Committee in Washington that the Fed “will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability,”
About $10 trillion was wiped from global equity markets in the third quarter. As of yesterday, benchmark measures for 37 out of 45 nations in the MSCI All-Country World Index posted declines of 20 percent or more from their peaks, according to data compiled by Bloomberg. Besides the U.S., only two other developed markets --the U.K. and New Zealand -- hadn’t dropped 20 percent or more from their most-recent highs.
The S&P 500 tumbled 14 percent in the third quarter, the worst drop since the three months ending December 2008. The Stoxx Europe 600 Index lost 17 percent in the third quarter.
--Editor: Michael P. Regan
To contact the reporters on this story: Michael P. Regan in New York at email@example.com; Rita Nazareth in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Michael P. Regan at email@example.com