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The global sell-off continued in Asia -- with
the exception of mainland China -- and Europe
before Wall Street rebounded in early trading.
Traders said investors took heart from upbeat
congressional testimony by Federal Reserve Board
Chairman Ben Bernanke.
He told legislators U.S. economic activity
remains solid and 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 are completed that there is a
reasonable chance that we'll see some
strengthening of the economy in 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 world 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 possible
recession.
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