U.S. stocks were down dramatically Thursday as fears grow about the faltering U.S. economy.

The S&P 500 was off almost three percent, and the Dow Jones lost a sharp 2.5 percent.

In congressional testimony, U.S. central bank chief Ben Bernanke expressed support for efforts to stimulate the economy, after a string of downbeat economic reports.

A Federal Reserve report showed manufacturing declining sharply in a key area, while a separate government study said the number of new homes under construction in 2007 dropped by 25 percent, the steepest drop for that industry since 1980.

And Merrill Lynch, one of the biggest brokers, reported a nearly $10 billion quarterly loss, the worst in the company's history.

President Bush is scheduled to offer ideas for stimulating the economy in a speech on Friday.

Some information for this report was provided by AFP, AP, Bloomberg  and Reuters.