Stocks Break Three-Day Winning Streak

NEW YORK (TheStreet) -- Stocks shed more than 1% Thursday after running up earlier in the week ahead of Federal Reserve Chairman Ben Bernanke's big speech on Friday.

The pullback was exacerbated by a swift anxiety-inducing selloff in Germany and the surprise news of Steve Jobs' resignation as CEO of Apple(AAPL) late Wednesday.

The major U.S. equity indices finished near session lows with the Dow Jones Industrial Average down by 171 points, or 1.5%, at 11,149. The S&P 500 lost 18 points, or 1.6%, at 1159, and the Nasdaq fell 48 points, or 2%, at 2420.

"The big problem right now is that the technical conditions are supportive of some selling," said RealMoney Contributor Rev Shark in a recent blog post. "We had a decent bounce over the last two days, due in large part to hope that Bernanke will give the bulls some ammunition, but now a lot of folks are wondering if there really is anything the Fed can do, other than give us some happy talk."

German markets came under pressure late in the European trading session. The DAX in Frankfurt closed off of its lows of the session, but still finished 1.7% lower. The quick drop came on speculation that the country's public finances are weakening and market restrictions may be coming from regulators, according to a Bloomberg report.

The FTSE in London dropped 1.4%. Earlier, both Hong Kong's Hang Seng and Japan's Nikkei jumped 1.5%.

"Some investors are trying to lock in some profit," said Robert Pavlik, chief market strategist at Banyan Partners, Thursday morning. "Investors are perplexed as to what to do next -- Get in? Bottom fish? Wait on the sidelines? There are a lot of questions out there."

Investors appear to be showing some caution ahead of Bernanke's speech at the Kansas City Fed conference in Jackson Hole, Wyo., on Friday. It was during the same conference a year ago that Bernanke first proposed a second round of quantitative easing to bolster the economy.

During the first three sessions of the week, stocks had surged as lack of major negative headlines gave way to speculation over Friday's speech. The Dow had climbed more than 500 points, or 4.56%, in the prior three trading days alone.

News that Warren Buffett's Berkshire Hathaway(BRK.B) is investing $5 billion in Bank of America(BAC) lifted market sentiment earlier in the session with the bank's stock jumping 11%. Bank of America finished 9.4% higher at $7.65 and shares of Berkshire Hathaway dipped 2.8%.

The financial sector was showing the mild losses in a session that saw 73% of the 5 billion shares trading on the New York Stock Exchange decline and only 26% rise. Some 1.8 billion shares changed hands on the Nasdaq.

Bank of America and American Express (AXP)were the only Dow components finishing in the green. JPMorgan Chase(JPM) traded near the top.

Energy, conglomerates and tech closed among the weakest sectors. Travelers(TRV), 3M(MMM), Caterpillar(CAT) and Cisco(CSCO) closed as the Dow's biggest laggards.