Stocks closed near session lows Thursday, reversing three days of gains, as investors remained cautious ahead of Bernanke's Jackson Hole speech on Friday.
The Dow Jones Industrial Average fell 170.89 points, or 1.51 percent, to finish at 11,149.82. Bank of America and AmEx were the only gainers on the blue-chip index.
The S&P 500 slumped 18.33 points, or 1.56 percent, to close at 1,159.27. Technical traders are watching 1,155 on the S&P 500 as the next key support level.
The Nasdaq declined 48.06 points, or 1.95 percent, to end at 2,419.63.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped more than 10 percent to trade near 40.
All 10 S&P sectors finished in the red, led by energy.
Bank of America soared almost 10 percent after Berkshire Hathaway said it will invest $5 billion in the bank. BofA shares have been hammered more than 30 percent in 2011. During the height of the financial crisis, Berkshire Hathaway stepped in to bolster Goldman Sachs in a similar manner.
“There are two sides to this story—Despite BofA’s protest that they don’t need capital, they’re taking $5 billion in capital,” explained Brian Battle, vice president of trading at Performance Trust Capital Partners. “And they’re also getting the seal of approval from Warren Buffett…but in the end, the stamp of approval isn’t cheap and you know [Buffett] will benefit from it.”
Battle said Buffett’s move is a net positive for Bank of America and also implies a bottom for financials.
Rivals Citigroup and Morgan Stanley also finished higher.