Stocks Slide, Nasdaq Skids 1%; JPM Gains

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 told CNBC. “One great earnings from JPM does not meant that financials have bottomed.”

Oil giant ConocoPhillips jumped after news the oil giant is splitting into two divisions, with refining and marketing in one and exploration and production in the other.

Meanwhile, oil prices dipped in volatile trading, as U.S. light, sweet crude slipped near $96 a barrel and London Brent crude traded around $118. Meanwhile, gold hit record highs for a second day.

News Corp tumbled after news the FBI opened an investigation into allegations that the media giant hacked into the phones of Sept. 11 victims. Shares of News Corp had soared in the previous session after the company walked away from its bid for BSkyB.

Among earnings, Yum Brands climbed after the parent company of KFC reported earnings that topped expectations and raised its full-year forecast.

Meanwhile, Marriott International tumbled after the operator of Ritz-Carlton hotels, reported an increase in quarterly profit, but provided a weak guidance that disappointed investors. Rivals Host Hotels and Starwood also fell.

Google is slated to post earnings after-the-bell.

Also on the tech front, Motorola Mobility slipped after Gleacher & Co and RBC cut their price target on the cell phone maker. Rival Research In Motion was also trading lower.

Medicis Pharmaceutical shares tumbled after the girlfriend of the company's CEO had been found dead at his mansion near San Diego, prompting an investigation by homicide detectives.

Meanwhile, NYSE Euronext edged higher after Deutsche Boerse confirmed and approved its merger with the firm. Shares were halted for a brief period immediately following the news.

Treasurys came off their lows after the government auctioned $13 billion in 30-year bonds which had a high-yield of 4.198 percent and a bid-to-cover ratio of 2.80.

On the economic front, weekly jobless claims dropped 22,000 last week to a seasonally adjusted 405,000, the lowest level in almost three months, according to the Labor Department. Economists had expected jobless claims to fall to 415,000.

Business inventories rose more than expected in Mayas sales recorded their first decline in almost a year, according to the Commerce Department. Meanwhile, producer prices in June posted their biggest decline since Feb. 2010as energy prices eased and retail sales edged up slightly in June, according to the Commerce Department.

Investors shrugged off news that Moody’scould lower the United States’ top ratingif lawmakers fail to agree on raising the debt ceiling. Moody’s said it saw the risk of a default as Congress struggles to find a deal to cut the deficit. President Obama will resume White House debt talks at 4:15 pm ET.

European stocks ended lowerfor the fourth session in five amid ongoing debt worries.

Coming Up This Week:

THURSDAY: Money supply, NPD video games sales; Earnings from Google
FRIDAY: CPI, Empire state mfg survey, industrial production, consumer sentiment, credit card default rates reported, Dell shareholder mtg; Earnings from Citigroup and Mattel

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