Markets Learn a Lesson
Monday, May 1, 2006; 6:09 PM
The stock market collapsed in the final hour of trading today after CNBC reported Federal Reserve Chairman Ben Bernanke believes Wall Street misinterpreted remarks he made last week about interest rates.
In a object lesson on the way Wall Street and Washington work, the revisionist version of the Fed chairman's views came out of a casual conversation Saturday night at the White House Correspondent's Dinner -- the black-tie bash regarded as Washington's party of the year.
As reporters Libby Copeland and Teresa Wiltz reported, the dinner is best known for celebrities and cleavage -- and not the cleavage between what the Fed chairman said and what he meant.
At the party, Bernanke was chatting up Maria Bartiromo, the CNBC reporter.
Bartiromo said she asked Bernanke if "the markets got it right" in interpreting his testimony at a congressional hearing last week.
"He said, flatly, no," she reported, knocking down the view -- popular on Wall Street until that moment -- that Bernanke might be prepared to stop cranking up interest rates.
Bartiromo didn't consider it a hot enough scoop to rush on the air with it. Instead she used the comments as the introduction to a live interview with Michael Moskow, president of the Federal Reserve Bank of Chicago.
As soon as she aired her comment, stocks sank.
Plunging 75 points in the final half-hour of trading, the Dow Jones industrial average swung from an advance of more then 50 points to a 24-point loss, closing at 11, 343.29. The Standard & Poor's 500 stock index fell 5 points to 1,305.19. The Nasdaq Stock Market composite index, dropped 18 to 2,304.79.
What did Bernanke have to say? "No comment," said a press spokesman for the Fed chairman.