Updated from 4:23 p.m. EDT
The major indices in New York cut losses in half in the final minutes of trading Wednesday but still closed lower as stocks took a breather after two days of advances.
The midweek declines came as ADP reported worse-than-expected private sector unemployment data;
Chairman Ben Bernanke urged Congress to mind the deficit; and energy stocks sold off due to inventory build and a dim outlook from
Dow Jones Industrial Average
fell 65.63 points, or 0.8%, to 8675.24, while the
declined 12.98 points, or 1.4%, to 931.76. The
gave up 10.88 points, or 0.6%, to 1825.92.
were the worst performers on the Dow, losing 4.3% and 3.9%, respectively.
all managed to gain more than 1%.
Crude oil futures dipped $2.43 to settle at $66.12 a barrel, and oil stocks were largely lower after the U.S. Energy Information Administration reported that domestic crude inventories rose 2.9 million barrels to about 366 million barrels. That's in comparison to an expected drawdown of 1 million to 2 million barrels.
That news came as refiner Valero Energy forecast a loss of 50 cents a share in the second quarter while analysts had predicted a profit of 41 cents a share. Valero also said it would issue 40 million shares of stock to raise about $750 million.
Valero fell about 18%.
gave up 3%;
lost 4.8%; and
The major indices extended losses somewhat after Bernanke testified before the House Budget Committee, saying that "maintaining the confidence in the financial markets requires that we begin planning now for the restoration of fiscal balance."
"He is concerned as am I and as are most people about the long-term fiscal budget implications, and is trying politely to tell Congress we're going to have to make difficult choices," says Michael Strauss, chief economist with Commonfund.
The Fed chairman had somewhat promising words for consumer spending and housing despite a continually bleak employment outlook. But there were enough caveats to keep caution in the air.
Bernanke said that sizable job losses and further increases in unemployment are likely over the next few months, although data show the pace of the economic contraction may be slowing.
"We continue to expect overall economic activity to bottom out, and then to turn up later this year," said Bernanke in his prepared remarks. "Our assessments that consumer spending and housing demand will stabilize and that the pace of inventory liquidation will slow are key building blocks of that forecast."
Investors had a plate of economic data to chew on with Bernanke's remarks. At 10 a.m. the Institute for Supply Management said its non-manufacturing index increased just slightly less than expected to 44 in May, up from 43.7 in April.
At the same time, the Department of Commerce released data showing that factory orders were up 0.7% in April, also just less than expected, after a 1.9% decline the month prior.
Earlier in the day, ADP reported that unemployment in the private sector rose more than expected last month, estimating that the economy shed 532,000 jobs. That's down from an upwardly revised 545,000 in April and more than the 525,000 anticipated.
The major indices advanced earlier in the week despite a pullback in financials related to a slate of offerings designed to help banks raise capital and pay back TARP.
The Fed surprised banks, including those that passed the stress test without needing more capital, with capital requirements that must be met in order to pay back TARP funds.
are among those needing to boost capital despite passing the test.
In other bank news, JPMorgan plans to shut down the hedge fund business and private-equity division of its principal investment management group.
In corporate news, luxury homebuilder
reported a slightly wider than expected loss of 52 cents a share for the second quarter, including a 48 cents-a-share pretax writedown. CEO Robert Toll said it "appears that some buyers are beginning to re-enter the new home market."
Toll Brothers fell 6.6%, however, and housing stocks pulled back sharply after rising on much better-than-expected pending home sales data earlier in the week. It didn't help that the Mortgage Bankers Association reported that mortgage applications in the U.S. fell 16% last week as the biggest jump in mortgage rates in seven months kept refinancing down.
retracted 4.9%; and
As for autos,
may stay in bankruptcy protection several days longer than expected, and
confimed the sale of Hummer to
Sichuan Tengzhong Heavy Industrial Machinery Co.
Gold fell $18.80 to $965.60. The dollar was recently stronger vs. the yen, and losing ground against the pound and euro.
Longer-dated Treasuries were rising; the 10-year gained 21/32, yielding 3.53%, and the 30-year gained 22/32, to yield 4.44%.
Stocks overseas were mixed. In Europe, London's FTSE 100 and Frankfurt's Dax lost 2.1% and 1.7%, respectively. But in Asia, Japan's Nikkei and Hong Kong's Hang Seng added 0.4% and 1%, respectively.