Worse-than-expected Economic Data Thwarts Rally

Even Federal Reserve Chairman Ben Bernanke was no longer emphasizing signs of economic stabilization on Wednesday, as he has done in recent months. In testimony to Congress, Bernanke focused instead on the government's growing debt load, saying that failing to ease the deficit could undermine efforts to revitalize the economy.

In the last hour of trading, however, some traders bought back into the stock market to take advantage of reduced prices, said Ryan Larson, senior equity trader at Voyageur Asset Management. It's the tactic known as bargain hunting, or "buying the dips," and the move signaled that many market participants still believe the rally has legs.

"At some point, it's hard to fight the trend, and the trend over the last couple of months has been up," Larson said. "People don't want to be left out."

The Dow fell 65.63, or 0.8 percent, to 8,675.24. The Standard & Poor's 500 index fell 12.98, or 1.4 percent, to 931.76. The Nasdaq composite index fell 10.88, or 0.6 percent, to 1,825.92.

The S&P 500 index and Nasdaq pulled back from their highest levels so far this year, reached Tuesday. Both the S&P and Nasdaq are still up for the year, but the Dow has yet to break back into positive territory for 2009. It got within 35 points, or 0.4 percent, of that break-even point on Tuesday.