By JeeYeon Park, CNBC.com
Stocks finished lower for the sixth-consecutive session Wednesday as investors worried over a slowing recovery following Ben Bernanke's grim outlook and after the Fed's latest Beige Book, which showed signs of a slowdown in several regions.
The Dow Jones Industrial Average fell 21.87 points, or 0.18 percent, to finish at 12048.94.
The S&P 500 slipped 5.38 points, or 0.42 percent, to end at 1279.56.
The Dow and the S&P have yet to close higher in June, declining approximately 4 and 5 percent, respectively.
The tech-heavy Nasdaq tumbled 26.18 points, or 0.97 percent, to close at 2675.38.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained almost 4 percent to close at 18.79.
Among the key S&P sectors, materials and banks sagged, while energy advanced.
Growth slowed in some U.S. regions during May, due to higher food and energy costs as well as supply disruptions stemming from Japan's earthquake took a toll, according to the Fed's periodic "Beige Book" summary.
This follows a late-session market selloff Tuesday after Bernanke said the U.S. economy had suffered a "loss of momentum" but that he still expected growth to pick up again, making a third round of quantitative easing unnecessary.
“There’s belief of a temporary slow patch and things are still going to be far below our potential and as such, the Fed’s going to be accommodative for now,” said Brown.
Brown expects a “long summer” ahead for the market, but long-term prospects are “still looking strong” for investors who are willing to be patient.
Meanwhile, strategists at Capital Daily said QE3 is unlikely this year and that equities are "likely to struggle"—with the S&P falling to 1,200 by year-end—even if the economy picks up.
Oil prices rallied after OPEC unexpectedly left its production levels unchanged and following a weekly government report that showed crude inventories fell more than expected. U.S. light, sweet crude gained $1.65 to settle at $100.74 a barrel. London Brent Crude gained $1.07 to settle at $117.85 a barrel.
Meanwhile, the Senate voted to let the Fed limit the fees that stores pay banks each time a consumer uses their debit card, marking a victory for retailers. Shares of Visa and MasterCard tumbled following the news, but ended off their lows.
Meanwhile, banks including Goldman Sachs, Bank of America, JPMorgan and Morgan Stanley are among companies considering layoffs as they struggle to rein in costs and produce profits in a weak market. Financials have been the poorest performer in 2011.
On the tech front, Cisco declined after Berenberg Bank cut its price target on the tech bellwether to $14 from $16.50.
And Ciena plunged more than 15 percent after the communication equipment maker posted a loss and forecast revenue below expectations.
Target shares were lower even after the retail giant announced a 20 percent quarterly dividend increase during its annual shareholders meeting.
Among other retailers, Gap sagged after Barclays downgraded clothing chain to "equal weight" from "overweight" and cut its price target to $17 from $22. Abercrombie & Fitch also slumped after the teen apparel retailer's CFO said the firm's results won't be as robust as the previous quarter.
In earnings news, Hovnanian tumbled more than 10 percent after the homebuilder said losses more than doubled after the firm sold fewer homes.
Treasury prices trimmed gains after the government auctioned $21 billion in 10-year notes, which had a high yield of 2.967 percent and a bid-to-cover of 3.23. On Thursday, the government is scheduled to auction $13 billion in 30-year bonds.
Volume on the consolidated tape of the NYSE was 3.90 billion shares, while 1.01 billion shares changed hands on the floor.
European shares closed lower for a sixth session to a 11-week low, with sentiment rattled by a bearish assessment of the economy from Bernanke.