Wall Street pulls back as Fed chief warns of recession

NEW YORK : Wall Street stocks ended lower on Wednesday after Federal Reserve chairman Ben Bernanke suggested the world's largest economy may have begun to slide into recession in the first half of this year.

Testifying before Congress, America's top central banker told lawmakers that the US economy would show scant expansion "and could even contract slightly" during the first six months of 2008.

The Dow Jones Industrial Average finished down 48.53 points (0.38 percent) at 12,605.83 after moving in and out of positive territory. The blue chip stock barometer had rallied by almost 400 points just a day earlier.

The tech-heavy Nasdaq composite index retreated a slight 1.35 points (0.06 percent) to 2,361.40 while the Standard & Poor's 500 index dipped 2.65 points (0.19 percent) to close at 1,367.53.

Stocks eventually lost ground after the central bank chairman acknowledged that economic growth had cooled amid a deep housing market slump and a widespread credit squeeze, but Bernanke suggested any potential recession would be mild.

"It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008," Bernanke told the Joint Economic Committee of Congress.

A recession is typically marked by two straight quarters of negative economic activity.

The US economy is being jolted by a persistent housing slump and a related credit squeeze as well as rising job losses and high oil prices. A growing number of private economists say the economy has already fallen into a recession.