Fed-Induced Selling: Take Three

For the third straight day, major stock proxies fell sharply after inflation warnings from a Fed official. But in contrast to the prior two days, some last-minute bottom-fishing helped the indices recover most of the lost ground by the close. But a selling bias and negative sentiment clearly dominated Thursday's session.

The Dow Jones Industrial Average finished down 30.26 points, or 0.3%, at 10,287.10, after earlier sinking to as low as 10,218.09. Still, the Dow has lost 350 points, or 2.7%, so far this week. Notable laggards among Dow components included Caterpillar (CAT Quote), Altria (MO Quote) and Hewlett-Packard (HPQ Quote).

Several stocks helped cushion the losses for the blue-chip average on Thursday, including Wal-Mart (WMT Quote). The retail giant said same-store sales rose 3.8% in September and expects an increase of 2% to 4% for October. General Electric (GE Quote) also gained after raising its earnings guidance.

The S&P 500 fell 4.90 points, or 0.41%, to 1191.49, off an earlier low of 1,182.24. The S&P has lost 37 points, or 3% in the four sessions through Thursday's close.

The broad average was again weighed down by steep losses in energy shares, as the price of crude oil fell below $62 per barrel. The Amex Oil Index fell 2.15%, led lower by the likes of Amerada Hess (AHC Quote), Occidental Petroleum (OXY Quote), Chevron (CVX Quote) and Valero (VLO Quote).

The Nasdaq Composite remained relatively weak throughout the day, closing down 18.94 points, or 0.9%, to 2084.08 vs. its intraday low of 2069.04. So far this week, the Nasdaq has lost 67 points, or 3.1%. On Thursday, the index was hampered by weakness in big-caps such as Intel (INTC Quote), Apple (AAPL Quote) and Amgen (AMGN Quote).

It was once again Dallas Fed President Richard Fisher who led an already nervous market to further downside Thursday. Fisher -- made famous for using baseball analogies to wrongly signal the Fed would soon end hiking interest rates back in June -- has returned to the public sphere after more than three-months of being kept under wraps.