Stocks fluctuated in a narrow range Wednesday as energy climbed after OPEC failed to reach an agreement on hiking oil production, but gains were limited after Fed chairman Bernanke's grim outlook of the economy.
The Dow Jones Industrial Average bobbed in and out of positive territory, after shaving all of the session's gains in the last hour of trading to finish down for the fifth straight dayTuesday.
Energy giants ExxonMobil and Chevron were among the blue-chip leaders, while DuPont slipped.
The S&P 500 and the tech-heavy Nasdaq were trading mixed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, was little changed around 18.
Among the key S&P sectors, materials and techs sagged, while energy advanced.
Speaking at a banking conference in Atlanta on Tuesday, Bernanke said the U.S. economy had suffered a "loss of momentum" but that he still expected growth to pick up again, making a third round of quantitative easing unnecessary. Bernanke’s comments helped accelerate a late-session selloff on Wednesday.
Bernanke’s cautious tone that the economy is well-below its potential is worrying investors, according to Scott Brown, chief economist at Raymond James.
“There’s belief that there’s a temporary slow patch and things are still going to be far below our potential and as such, the Fed’s going to be accommodative for now,” said Brown.
Brown said he expects a “long summer” ahead for the market, but long-term prospects are “still looking strong” for investors who are willing to be patient.
Meanwhile, government officials and investors described the suggestion to allow a small U.S. debt default to force government spending cutsas a "horrible idea" which could destabilize the world economy and sour already tense relations with big creditors like China.
Oil prices turned higher after OPEC unexpectedly left its production levels unchanged and after a weekly government report showed crude inventories fell more than expected. U.S. light, sweet crude gained to near $101 a barrel while London Brent Crude was trading around $118. The next OPEC meeting is scheduled to take place in December.
ExxonMobil gained after the Dow component said it made two new oil discoveries in addition at a natural gas find in the deepwater Gulf of Mexico.
Meanwhile, banks including Goldman Sachs , Bank of America , JPMorgan and Morgan Stanley are among those that are considering layoffs as they struggle to rein in costs and produce profits in a weak market, according to the New York Post. The financial sector has been the poorest performer in 2011.