Fed Chairman Ben Bernanke hinted that more rate cuts could be on the way in his statement Thursday in Washington.
"The outlook for the economy has worsened in recent months," Bernanke said, indicating that the Fed would maintain its aggressive posture in the near term. Although inflation remains a concern, Bernanke reiterated his belief that prices would moderate this year.
Meanwhile, U.S. Treasury Secretary Henry Paulson was a bit more bullish in his statement Thursday. He praised the government for passing a stimulus package and said he predicts the mortgage markets will improve in 2008.
Immediately after the statements, the markets sharply declined, with the Dow shedding more than 100 points.
The session started with more news concerning the rocky road facing financial companies. Swiss bank UBS (nyse: UBS - news - people ) reported an $11.3 billion fourth-quarter loss, after taking nearly $14 billion on write-downs.
Shares of UBS were down more than 8%, while Merrill Lynch (nyse: MER - news - people ), Lehman Brothers (nyse: LEH - news - people ), Morgan Stanley (nyse: MS - news - people ) and Goldman Sachs (nyse: GS - news - people ) were all down more than 1%.
In deal news, the U.S. Justice Department approved the buyout of Clear Channel Communications (nyse: CCU - news - people ) on Wednesday. The deal, under which Bain Capital and Thomas Lee Partners will take Clear Channel private, was given the go-ahead on the condition the companies sell off some of Clear Channel's radio stations in Cincinnati, Houston, Las Vegas and San Francisco.
Finally, keep an eye on Marriott International (nyse: MAR - news - people ). The hotel chain said profits dropped 20% in the fourth quarter after it shuttered a synthetic fuel business. Excluding that charge, the company netted 62 cents a share, which was in line with expectations
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