NEW YORK - The Federal Reserve took financial markets for a ride Wednesday, pushing stock prices up in the morning, then sending them down in the afternoon.
Prices surged on congressional testimony by Fed Chairman Ben Bernanke early in the day that suggested the central bank would not end its massive economic stimulus program any time soon. But then minutes of a Fed meeting were released suggesting the stimulus could be scaled back as early as next month if the economy picks up, and stocks began dropping fast.
The Fed minutes showed that some policymakers favored tapering a bond-buying program. That prompted traders to dump U.S. government bonds, sending their interest rates, or yields, higher.
The yield on the benchmark 10-year Treasury note rose above 2 percent for the first time since March 14, to 2.03 percent from 1.93 percent the day before.
The Fed is buying $85 billion worth of bonds every month as part of its stimulus program. That has kept interest rates low and encouraged investors to put money into stocks and other riskier assets instead of bonds. If the Fed slows down its bond purchases, investors fear, it could lead to an outpouring of money from the stock market and back into bonds.
The Dow Jones industrial average ended the day down 80.41 points, or 0.5 percent, to 15,307.17. Earlier, the index had risen as much as 154 points after Bernanke started speaking to lawmakers. The Standard & Poor's 500 fell 13.81 points to 1,655.35, a decline of 0.8 percent. The Nasdaq composite was down 38.82 points at 3,463.30, or 1 percent.
The Russell 2000 index of small-company stocks fell 16.52 points to 982.26, a loss of 1.7 percent.
In addition to stimulus from the Fed, other factors have been pushing the stock market higher, including a rebounding housing market, a pickup in hiring, and strong earnings at big U.S. companies. On Wednesday, S&P Capital IQ reported that earnings in S&P 500 companies had reached a quarterly record.
Among big moves, Bristol-Myers Squibb jumped 5 percent, or $2.34, to $46.40 after a Citigroup analyst raised his rating on the drugmaker. The analyst said the company could be a big winner with a group of cancer treatments under development.
Saks rose $1.83 to $15.50, or 13 percent, after the New York Post reported that the luxury retailer had hired Goldman Sachs to explore options for the company, including a possible sale.
The price of gold fell $10.20 to $1,367.40 an ounce, a drop of 0.7 percent. Crude oil fell $1.90 to $94.28 a barrel on the New York Mercantile Exchange.