Bernanke Comments, Sluggish China Data Ignite Stock Sell Off

Bernanke Comments, Sluggish China Data Ignite Stock Sell Off

U.S. stocks were down nearly 1% in early trading as the Nikkei experienced its largest drop in two years, closing 225 down, with news that Chinese factory figures shrank for the first time in seven months. Also worrying were Federal Reserve Chairman Ben Bernanke’s comments indicating that the days of printing nearly-free money–known as quantitative easing–may soon be scaled back.

“We are kind of in a situation where all news is bad news in a way when the Fed starts to talk,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

“They are pretty well maxed out… so you are kind of here waiting on the end game.”

Fed meeting minutes also revealed that some members are concerned that the Fed’s continued economic tinkering and $85 billion-a-month bond buying scheme may have led Wall Street to place too much confidence in the bank’s eagerness to continue its so-called quantitative easing.

As for Japanese markets, CLSA’s Japan strategist told CNBC, “Almost everything went wrong during the day–the bond market had a bit of a crash, China PMI data, and the yen is stronger. The market is really overheated, all it’s looking for is a trigger.”