Stocks declined Thursday after Bernanke said the Federal Reserve is not prepared to take further action on the economy and amid ongoing concerns about the U.S. debt ceiling.
Stocks rallied earlier, fueled by positive economic news as well as stronger-than-expected earnings results from JPMorgan. (Read More: Pisani—Traders Have 'Crisis Fatigue')
The Dow Jones Industrial Average struggled to pop into positive territory, after snapping a three-day losing streak in the previous session.
Alcoa and DuPont were the biggest laggards on the blue-chip index, while JPMorgan gained.
The S&P 500 and the tech-heavy Nasdaq declined. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded above 20.
All 10 S&P sectors turned lower, led by materials and techs,while health care gained.
Fed Chairman Ben Bernanke's comments appeared to shut the door on any near-term possibilities of another round of bond buying, giving a boost to the dollar.
"The situation is more complex," Bernanke told the Senate Banking Committee. "Inflation is higher...We are uncertain about the near-term developments in the economy. We would live to see if the economy does pick up. We are not prepared at this point to take further action."
Stocks had gained in recent days following Bernanke's statements that implied the Fed may be preparing for another round of Treasury bond buying.
“I don’t think even QE2 was effective as the Fed estimated," Joe Lavorgna, chief economist for Deutsche Bank Global Markets. "I hope they don’t do QE3 as I think it may do more harm than good at this point.”
JPMorgan led the Dow gainers after the banking giant reported better-than-expected earnings as the absence of a British tax on bonuses helped improve their bottom line. Rivals BofA , Citigroup and Goldman Sachs were mixed. Citigroup is slated to report on Friday.
However, some traders remained skeptical on the banking sector.
“I think you need to wait for more information,” Dan Fitzpatrick, trader and senior contributor to RealMoney.com told CNBC. “One great earnings from JPM does not meant that financials have bottomed.”