U.S. stocks slipped for the sixth straight day on Wednesday after Federal Reserve Chairman Ben Bernanke's assessment of the economy kept investors worried about the recovery.
The three major U.S. stock indexes reversed gains late in Tuesday's session after the Fed chairman acknowledged the recovery has slowed, but offered no hint the U.S. central bank is considering any more stimulus to accelerate growth.
The market was expecting a hint from the Fed about the implementation of a third round of asset-buying, according to Paul Zemsky, head of asset allocation at ING in New York. The Fed's $600 billion second round of stimulus, expected to end this month, has been a catalyst for the stock market's advance.
But Zemsky said the Fed will probably allow some time for the economy to show it can stand on its own before committing
to more stimulus. In the meantime, absent positive economic data surprises, the market weakness could remain.
I think we're going to right around the 200-day moving average at 1,250 on the S&P 500, Zemsky said. That's the level we traded in March during the Japan crisis and seems a good place to see if the market supports.
There were also signs of weakness from corporate America. Communications networking equipment provider Ciena Corp
Ciena fell 13.5 percent to $20.95 while JDS Uniphase Corp
The Dow Jones industrial average <.DJI> shed 8.29 points, or 0.07 percent, to 12,062.52. The Standard & Poor's 500 Index <.SPX> edged down 1.81 points, or 0.14 percent, to 1,283.13. The Nasdaq Composite Index <.IXIC> dropped 13.25 points, or 0.49 percent, to 2,688.31.
The S&P 500 is down more than 6 percent from its 2011 intraday high hit May 2. A drop to 1,250 would extend the decline to 8.9 percent, close to the 10 percent fall typically described as a market correction.
Limiting losses, the energy sector rose sharply after talks at the oil cartel OPEC in Vienna broke down without an agreement on a production hike. The S&P 500 energy index <.GSPE> rose 0.8 percent, with Exxon Mobil
U.S. crude futures jumped over 2 percent to a session high above $101 per barrel after the OPEC talks broke down, but pared some gains following data from the Energy Information Administration showing U.S. crude oil inventories fell more than expected last week. In late morning trading, U.S. crude for July delivery was up 1.6 percent at $100.69 a barrel.
(Reporting by Rodrigo Campos; Additional reporting by Edward Krudy; Editing by Jan Paschal)