Late Selling Hits Stocks

Oil and gold climb.
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Updated from 3:17 p.m. EST

Stocks struggled for direction for much of the session Wednesday, but a fast-developing selloff in the final minutes of trading left the major averages saddled with losses at the close.

The

Dow Jones Industrial Average

fell 76.08 points, or 0.6%, to 13,231.01, and the

S&P 500

lost 10.47 points, or 0.7%, at 1470.58. The

Nasdaq Composite

declined by 29.33 points, or 1.1%, to 2644.32.

"Without a follow-through to yesterday's advance, there wasn't much participation today and yesterday's rally petered out," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "There was a lack of a catalyst today, and the market unwound late in the day. It certainly doesn't make anyone feel good to see a decline today, but it shouldn't have been all that surprising."

Breadth was negative. On the

New York Stock Exchange

3.80 billion shares changed hands, as decliners beat advancers by a 10-to-7 margin. Volume on the Nasdaq reached 2.36 billion shares, with losers topping winners nearly 3 to 2.

"This was extreme volatility, as people were positive one minute and negative the next," said Paul Mendelsohn, chief investment strategist with Windham Financial. "Given the way we closed, we should see weakness carry over from the close into tomorrow. Everyone showed their hand at the end of the day today, and that's why the last half hour was so critical."

He said traders were bothered all day by the bond market, "as yields should've gone up a lot considering how good the economic data was. The bond market is still negative in regards to what's coming."

At 4 p.m. EST, the 10-year Treasury note was up 1/32 in price, yielding 4.26%. The 30-year bond was up 7/32, yielding 4.60%.

Despite the late selling in stocks, one notable bright spot was

Bear Stearns

(BSC)

, who said it would take a $1.2 billion writedown in the fourth quarter but also indicated that it might be getting a handle on the worst of its exposure to troubled debt. As a result, its shares climbed $2.58, or 2.6%, to $103.45.

Rival

Merrill Lynch

(MER)

confirmed it will install

NYSE Euronext

(NYX)

head John Thain as CEO. That sent the stock 1.8% higher to $57.98.

Bear's comments and Merrill's news, though, failed to bolster the financials. The KBW Bank Index was off 1.7%, and the Amex Financial Sub Index ended down 0.6%.

Another positive was the Labor Department's October producer price index, which showed a rise of just 0.1%. The core PPI, a number that excludes food and energy, was unchanged. Both readings were better than forecasts.

Ian Shepherdson, chief economist with High Frequency Economics, said the data suggest inflation ought not be a barrier to further

Federal Reserve

interest rate cuts.

"The headline was lifted entirely by food prices, which jumped 1.0%, while energy prices dipped," he said. "Higher food prices are passing through into the

consumer price index, but with wage gains slowing, this just means consumers' real incomes are being squeezed.

It is not inflationary."

The CPI, arguably the more important of the two price reports, will be released Thursday.

Fed Chairman Ben Bernanke spoke before the Cato Institute about Federal Open Market Committee communications. Bernanke said the FOMC will release expanded forecasts in a more timely fashion as a measure to make the central bank more transparent.

Starting Nov. 20, the Fed will release expectations for prices, gross domestic product and unemployment figures in the coming three years. The central bank will also release economic forecasts quarterly, up from twice a year.

"The changes will provide a more timely insight into the committee's outlook, will help households and businesses better understand and anticipate how our policy decisions respond to incoming information and will enhance our accountability for the decisions we make," said Bernanke. "The projections also function as a plan for policy -- albeit as a rough and highly provisional one."

Also on the economic front, the Commerce Department said that retail sales rose 0.2% last month, as expected. Excluding autos, retail sales were up 0.2%, also in line with estimates.

Elsewhere,

HSBC Holdings

(HBC)

said it would take a $3.4 billion charge during the third quarter because of the subprime mortgage and credit mess. However, the bank believes the writedown will be offset by revenue growth in other areas. The stock was up 7 cents, or 0.1%, to $88.85.

Delta Air Lines

(DAL) - Get Report

was one of the day's winners, rising 4.1% to $19.52 on speculation it might merge with

UAL Corp.'s

(UAL) - Get Report

United Airlines. UAL gained 1.5% to $44.17.

On the earnings docket,

Macy's

(M) - Get Report

said it swung to a third-quarter profit, topping Wall Street's expectations. The department-store chain also provided guidance for fourth-quarter earnings and revenue that were in line with estimates. Still, shares of Macy's lost $2.18, or 7.1%, to $28.47.

Several firms were out with ratings changes. Among them, Citigroup upgraded

International Paper

(IP) - Get Report

to buy from hold, while Bear Stearns downgraded

Hershey Foods

(HSY) - Get Report

to underperform from peer perform.

International Paper tacked on 0.7% to $34.49, while Hershey finished 4.4% lower at $40.24.

Away from equities, commodities rebounded after a multisession slide. Crude rallied $2.92 to close at $94.09 a barrel, gold jumped $15.70 to $814.70 an ounce, and silver rose 45 cents to $15.06 an ounce.

Overseas markets were higher. In Asia, Hong Kong's Hang Seng surged 4.9%, and Japan's Nikkei 225 advanced 2.5%. Among European bourses, London's FTSE 100 climbed 1.1%, while Germany's Xetra Dax tacked on 0.1%.