Stocks Stop the Bleeding

"The market was overdue for a shakeout," said Larry Wachtel, senior market analyst with Wachovia Securities. "We had gone eight months without a correction. The magnitude of the correction was overdone, however. The Chinese market that precipitated the decline has come back, so the question is whether we can follow suit."

Treasury prices faltered after the prior day's surge. The 10-year note was off 10/32, yielding 4.55%, and the 30-year bond slumped 19/32, yielding 4.67%.

While no relief was found in the prepared testimony from Federal Reserve Chairman Ben Bernanke, who spoke before the House of Representatives about long-term fiscal challenges, the question-and-answer session yielded soothing comments regarding the central bank's outlook.

"The Fed has been closely monitoring the markets. They seem to be working well, and working normally," said Bernanke, describing his reaction to the previous day's plunge. "My view is that taking all the new data into account, there is no material change in our expectations for the economy since I last reported to Congress."

Meanwhile, fresh government data showed that the U.S. economy grew at a weaker rate during the fourth quarter than previously reported. The Commerce Department said gross domestic product rose 2.2% last quarter, up from the advance reading of a 3.5% annual pace. The latest reading matched expectations.

Core consumer price inflation rose 1.9%, annualized, during the fourth quarter, revised lower from 2.1%.