“US stocks fell back after Federal Reserve chairman Ben Bernanke’s testimony to US congress.
The Fed chief warned the economic outlook remains "unusually uncertain," but he gave few clues on what measures the central bank might take to deal with this uncertainty.
Bernanke reiterated that the US economy would avoid falling into another recession in the near term. Economic growth would allow the Fed to tighten its monetary policy eventually, he added.
Investors, expecting some clear signals over the direction of what the Fed intends to do, were unimpressed. The Dow tumbled 109 to 10,120. Nasdaq shed 35 at 2,187, while the S&P 500 gave back 13 at 1,069.
President Barack Obama, meanwhile, signed the Wall Street reform bill, the most historic set of financial rules since the Great Depression.
US lawmakers agreed on the new deal to reform the financial system in May, with the Senate and House voting in favour of rules that govern banks and investment firms. Lawmakers eventually agreed to soften measures that would have stripped banks of the ability to trade in derivates.
Banks will be allowed to make traditional trades of contracts but those that wish to make riskier trades would need to spin off the divisions that trade derivatives contracts into affiliates in two years. Under the new rules, "too-big-to-fail" banks will also be required to install new capital and leverage limits.
Morgan Stanley beat Wall Street expectations with a quarterly net profit of $1.4bn compared with a loss of $138m in the same period last year. Net revenue was $7.95bn, up 53% from the second quarter of 2009.
Elsewhere in the sector, Wells Fargo saw quarterly net profit fall slightly to $3.1bn, or 55c a diluted share, from $3.2bn a year earlier, but the figure was still better than expected. Analysts were looking for earnings per share of 49c.
Coca-Cola also posted a second-quarter profit that beat forecasts. Freeport-McMoRan Copper & Gold reported better than expected second quarter profit because of higher sales of copper.
S&P 500 - Risers
Textron Inc. (TXT) $19.65 +8.68%
Morgan Stanley (MS) $26.80 +6.26%
Eaton Corp. (ETN) $73.14 +5.91%
Goodyear Tire & Rubber Co. (GT) $11.73 +3.62%
S&P 500 - Fallers
SLM Corp. (SLM) $10.34 -11.32%
Stryker Corp. (SYK) $46.75 -8.85%
Yahoo! Inc. (YHOO) $13.95 -8.25%
Tenet Hlthcre Corp. (THC) $4.30 -6.52%
Dow Jones I.A - Risers
Coca-Cola Co. (KO) $54.08 +1.58%
Caterpillar Inc. (CAT) $66.87 +0.66%
AT&T Inc. (T) $24.92 +0.52%
3M Co. (MMM) $82.30 +0.13%
Dow Jones I.A - Fallers
JP Morgan Chase & Co. (JPM) $38.42 -3.05%
Bank of America Corp. (BAC) $13.36 -2.98%
Johnson & Johnson (JNJ) $57.12 -2.49%
Hewlett-Packard Co. (HPQ) $45.48 -2.42%
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