Stocks trip on Bernanke message

NEW YORK — Wall Street retreated Wednesday but managed a late-day partial recovery as investors reacted uneasily to Federal Reserve Chairman Ben Bernanke's comments on the economy and news that two Bear Stearns hedge funds were essentially worthless.

The Dow fell 53.33 to 13,918.22. The blue-chip index was down by as much as 134 points during the session.

Microsoft, one of the 30 Dow stocks, gained 14 cents to close at $30.92 a share. Boeing, also a Dow stock, fell 23 cents to $101.82.

Broader indexes also fell. The Standard & Poor's 500 index fell 3.20 to 1,546.17; the Nasdaq composite index dropped 12.80 to 2,699.49.

Even without any bad news, a downturn in stocks was expected after the rally that began last week. On Tuesday, the Dow nudged past 14,000 for the first time. With no major catalyst behind the advance, the record run perhaps has puzzled market watchers trying to determine if it has room to build or has run its course.

Investors sold off shares as Bernanke said the economy should strengthen into 2008 and inflation risks remain the Fed's "predominant" concern. He said the housing sector might get worse before it gets better and remains a risk to consumer spending and overall economic growth.

Bernanke's comments exacerbated investors' concern over news that the Bear Stearns funds were left essentially worthless by bad bets on subprime loans, and lackluster earnings.

JPMorgan Chase & Co. posted better-than-expected earnings, but the bank said it increased reserves to cover mortgage losses. Also adding to investor concern, Intel reported lackluster profit margins Tuesday for the second quarter, the same day Yahoo lowered its forecast.

A barrel of light sweet crude rose $1.03 to $75.05 on the New York Mercantile Exchange. Oil rose after the U.S. Department of Energy said gasoline stockpiles unexpectedly fell.