Stocks fell Wednesday, erasing early gains, as the U.S. Federal Reserve's pessimistic economic growth outlook overshadowed optimism about the health of U.S. banks. Stocks jumped in early trading as investors welcomed Bank of America's $13.5 billion stock sale. Energy shares also rose as oil prices hit a sixth-month high. But the market slumped in the final hour of trading after the Fed reduced its growth forecast and increased unemployment expectations. The central bank also said it expects a recovery in sales and production to start during the second half of the year. Meanwhile, Congress approved legislation that imposes greater restrictions on the credit-card industry raising interest rates and imposing higher fees. Separately, President Barack Obama said the financial markets have recently improved, but he warned that unemployment will remain high for some time. Similarly, Treasury Secretary Timothy Geithner told a Senate committee there were “encouraging signs the financial system is starting to heal,” but he warned that “we're only beginning to lay the foundation for economic recovery.” He also said that stress-tested banks have raised much of the necessary capital they need. The Dow Jones industrial average fell 52.81, or 0.6 percent, to 8,422.04. Bank of America shares gained 2 percent after the company said it has raised $13.47 billion through a sale of stocks. The broader Standard & Poor's 500 index fell 4.66, or 0.5 percent, to 903.47. The technology-heavy Nasdaq composite index fell 6.70, or 0.4 percent, to 1,727.84. The New York Stock Exchange composite index fell 1.83 to 5,870.39. The American Stock Exchange composite index rose 29.35 to 1,533.28. And the Russell 2000 index fell 3.91 to 489.35.
