Stocks Slide, Led by Energy; Disney Climbs

Stocks turned lower Wednesday, led by energy, as investors raked in profits a day after the market closed at fresh 2-1/2 year highs.

The Dow Jones Industrial Average slipped almost 20 points, after the blue-chip index finished higher for a seventh-consecutive session on Tuesday.

Chevron , IBM and United Technologies fell, while Disney and Coca-Cola were higher on the blue-chip index.

The S&P 500 and the Nasdaq were also lower. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 16.

Among the key S&P 500 sectors, consumder discretionary and telecoms were higher, while utilities, financial and energy stocks declined.

In a speeech before the House Budget Committee, Federal Reserve Chairman ben Bernanke said U.S. unemployment remains too high for policymakers' comfortdespite signs of strength in the economic recovery.

"The job market has improved only slowly," said Bernanke. "This gain was barely sufficient to accommodate the inflow of recent graduates and other new entrants into the labor force and, therefore, not enough to significantly erode the wide margin of slack that remains in our labor market."

The dollar slipped against a basket of currenciesas Bernanke's testimony pushed U.S. Treasury yieldsslightly lower, making the greenback less attractive.

Statements by Fed governors on Tuesday indicated that some Fed officials are prepared to discuss a tightening of monetary policy in light of looming inflation.

Richmond Fed President Jeffrey Lacker said the Fed should be willing to cut back its $600 billion in Treasury purchases if employment improves and consumer spending holds up.

Brian Sack, the executive vice president of the Markets Group at the Federal Reserve Bank of New York, is scheduled to speak at an event at the Philadelphia Fed at 5:45 p.m. ET. Sack is expected to discuss the Fed's asset purchase program.

On the earnings front, Coca-Cola rose after the beverage giant reported higher-than-expected quarterly sales, thanks to its third straight quarter of sales growth in North America.

Shares of fellow Dow component Disney jumped more than 6 percent after the media conglomerate posted a profit that beat forecasts, aided by a hefty rise in advertising sales at its ESPN cable sports channels and a strong showing from its parks and resorts division.

Polo Ralph Lauren soared almost 10 percent after the retailer posted a bigger-than-expected jump in quarterly profit on strong clothing sales over the holiday season and said its momentum should continue in the current quarter.

And Sanofi-Aventis said hefty new restructuring costs caused its net profit to slump 64 percent, amid continued uncertainty over the fate of its nearly $20 billion bid for U.S. biotechnology firm Genzyme.

Meanwhile, Syngenta advanced after the world's biggest maker of agricultural chemicals posted a forecast-beating set of 2010 figures. The company is set to benefit from soaring food prices as farmers invest in products to boost harvests and buy more weed and bug killers.

Cisco , Activision Blizzard and MetLife are among firm that will be reporting after-the-bell tonight.

• Poll: Are You Buying Cisco Ahead of Earnings?

Shares of NYSE Euronext were halted after the firm confirmed advanced merger talks with Deutsche Boerse. The halts came on a day that London Stock Exchangeand Toronto Stock Exchange parent TMX Groupsaid they agreed to a blockbuster trans-Atlantic merger.

Shares of rivals Nasdaq OMX, IntercontinentalExchange, CBOE and CME were also higher amid the speculation.

On the tech front, Apple climbed after the Wall Street Journal reported that the tech giant has begun to make a new version of its iPad tablet computer with a front-facing camera and faster processor.

Oil briefly extended gains to trade above $87 a barrelin choppy trading after a government oil inventory report showed crude stocks rose last week, though less than expected. Gold prices traded above $1,365 an ounce.

Energy giants including Chevron , ExxonMobil and ConocoPhillips were trading to the downside.

Shares of 3M rose after the diversified manufacturer raised its dividend and announced a $7 billion share repurchase program.

Meanwhile, AIG said it will take a fourth-quarter charge of $4.1 billionfor raising loss reserves at global property insurer Chartis. On Tuesday, the insurer opted to delay its "re-IPO" until late April or May, according to sources.

Wells Fargo shares declined more than 3 percent after the banking giant said CFO Howard Atkins will retireand will be replaced by the bank's administrative chief.

Shares of St. Joe dropped after the Florida real estate company, is considering a sale among other options. The firm said it was being advised by Morgan Stanley.

In the morning's economic news, applications for U.S. home mortgages dropped last weekas the highest interest rates in 10 months sapped demand for home loan refinancing, acording to the Mortgage Bankers Association. The group said its index of mortgage application activity, which includes both refinancing and home purchase demand, fell 5.5 percent in the week ended Feb. 4.

The government is scheduled to auction 10-year notes at 1pm ET.

Overseas, European shares fell, further retreating from 29-month highs hit earlier this week, weighed down by miners.

Coming Up This Week:

WEDNESDAY: 10-year Treasury note auction; Earnings from Cisco, Activision Blizzard, MetLife, Prudential and WholeFoods.
THURSDAY: BoE announcement, jobless claims, wholesale trade, Atlanta Fed speaks, 30-year Treasury bond auction, Treasury budget, Ebay investor day, Verizon iPhone goes on sale; before-the-bell earnings from PepsiCo, Philip Morris and Sprint; after-the-bell earnings from Kraft and Expedia.
FRIDAY: International trade, consumer sentiment, Nokia analyst day; earnings from Discovery Communications.

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