Stocks fell on Wednesday, led by financials in a late-stage sell-off, after the Federal Reserve gave a more pessimistic view on the economy, tempering hopes for a quick recovery.
The Fed cut its 2009 forecast for gross domestic product and raised its outlook for unemployment, undercutting recent optimism that the economy might be turning the corner.
Financial shares had led the market higher in morning trading after a successful share offering from Bank of America
It sounds as though they (the Fed) are a little less excited about the economy than they were originally or as we were led to believe, said Paul Nolte, director of investments at Hinsdale Associates in Hinsdale, Illinois. It's certainly not encouraging of the green shoots that everybody else is talking about.
Technology shares were also a negative as Hewlett-Packard
The Dow Jones industrial average <.DJI> fell 52.57 points, or 0.62 percent, at 8,422.28. The Standard & Poor's 500 Index <.SPX> lost 4.64 points, or 0.51 percent, at 903.49. The Nasdaq Composite Index <.IXIC> was off 6.70 points, or 0.39 percent, at 1,727.84.
Energy stocks also lost ground even as crude oil surged. Shares of Exxon Mobil
But stocks considered to be defensive plays were among gainers, including consumer staples and healthcare.
On the healthcare front, Merck & Co
On Nasdaq shares of big cap tech stocks were among the top drags following the disappointment from Hewlett-Packard, a technology bellwether. Apple Inc
U.S. front-month crude settled up 3.2 percent to $62 per barrel on New York Mercantile Exchange.
Trading was active on the New York Stock Exchange, with about 1.65 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.30 billion shares traded, above last year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by 1,591 to 1,452 while decliners beat advancers on the Nasdaq by 1,453 to 1,239.
(Editing by Leslie Adler)