Stocks end lower after Bernanke comments

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The central bank has been lowering key interest rates since September, and it usually takes six to nine months before rate moves affect the economy.

Banks fell on Bernanke's testimony, and on a huge loss at the Switzerland-based bank UBS AG. UBS reported a fourth-quarter net loss of $11.28 billion due to investments in U.S. subprime mortgages. The bank, which posted its first full-year loss in a decade, said it expected more debt problems in 2008. Its U.S.-traded shares fell $3.05, or 8.3 percent, to $33.94.

Wall Street's decline also reflected its underlying concerns about bond insurers, which are in danger of losing their superior ratings because of bad mortgage debt.

Late Wednesday, MBIA Inc. raised $1.1 billion from the sale of a nearly 40 percent stake in the company. Shares of the bond insurer rose 98 cents, or 8.4 percent, to $12.62.

MBIA told Congress Thursday it has enough cash to survive the distress in the industry, and that it needs neither a bailout nor tighter federal regulation. But lawmakers say action is necessary. New York regulators are working with banks and bond insurers on a plan to raise insurers' cash levels.

Moody's Investors Service downgraded another bond insurer, Financial Guaranty Insurance Co., to a financial strength rating of "A3" instead of "AAA." The ratings agency said it believes the larger bond insurers MBIA and Ambac are "better positioned from a capitalization and business franchise perspective," but that it is still reviewing its ratings on the two companies.

The dollar was mixed against other major currencies.

The weak dollar is, somewhat counterintuitively, helping to prop up the economy right now because U.S. goods are cheap for foreign buyers. The government reported Thursday that the nation's trade deficit, which had ballooned to record levels for five straight years, finally narrowed in 2007. In December, the deficit dropped 6.9 percent to $58.8 billion, thanks largely to strong increases in U.S. exports.

High oil prices, however, are keeping the deficit from narrowing further. On Thursday, light, sweet crude oil rose $2.19 to $95.46 per barrel on the New York Mercantile Exchange.

Gold prices fell.

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