The weakness was highlighted by Bernanke's comments late on Tuesday. He acknowledged that the recovery has slowed, but offered no hint the U.S. central bank is considering any more stimulus to accelerate growth.
"Investors are re-pricing the slowdown after Bernanke crystallized it," said Jason L. Ware, senior equity research and trading analyst at Albion Financial Group in Salt Lake City, Utah.
On top of that, "the market was hoping for an indication that there may be another round of stimulus but clearly, that's not what they got."
The Fed's $600 billion second round of stimulus, expected to end this month, has been a catalyst for the stock market's advance.
Defensive stocks in the healthcare and utility sectors rose, but financials and technology, sectors closely related to growth, kept up their losing streak.
The Dow Jones industrial average (.DJI) was up 5.60 points, or 0.05 percent, at 12,076.41. But the Standard & Poor's 500 Index (.SPX) was down 2.14 points, or 0.17 percent, at 1,282.76. The Nasdaq Composite Index (.IXIC) was down 20.42 points, or 0.76 percent, at 2,681.10.
"I think 1,250 is a key level (on the S&P) and, if we get there, likely to provide support for the market, barring any further erosion in the underlying economic data," Ware said.
SHARPER DECLINE FORESEEN
Credit Suisse's U.S. equity strategist Doug Cliggott said on Wednesday the S&P 500 could fall roughly 10 percent from its current level, partly due to the approaching end of the Federal Reserve's bond-buying program.
"We would think an index between 1,170 and 1,200 would be a realistic estimate of where we might be headed," Cliggott said at the Reuters Investment Outlook Summit in New York.
His comments followed a bearish tone from Citigroup strategist Tobias Levkovich on Tuesday. Levkovich said major U.S. stock indexes could fall as much as 10 percent from their May highs. A 10 percent fall is typically described as a market correction.
There were also signs of weakness from corporate America. Communications networking equipment provider Ciena Corp (CIEN.O) forecast third-quarter revenue below expectations, driving down its stock and others in the sector.
Ciena fell 17.2 percent to $20.05, while JDS Uniphase Corp (JDSU.O) dropped 4.6 percent to $17.56.
Limiting losses, the energy sector rose after talks at the oil cartel OPEC in Vienna broke down without an agreement on a production hike. The S&P 500 energy index (.GSPE) rose 0.8 percent, with Exxon Mobil (XOM.N) up 1.5 percent at $81.17.
U.S. crude oil futures rose nearly 2 percent to settle above $100 a barrel.
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