US STOCKS-Wall St edges down after Bernanke but data supports

Wed Feb 29, 2012 3:02pm EST

* Chicago PMI far better than expected

* Monthly market volume drops 12 pct from yr ago

* Dow off 0.2 pct, S&P off 0.2 pct, Nasdaq off 0.3 pct

By Caroline Valetkevitch

NEW YORK, Feb 29 (Reuters) - U.S. stocks dipped on Wednesday as U.S. Federal Reserve Chairman Ben Bernanke's comments were viewed as a bit more hawkish, but reports suggesting more improvement in the economy curbed losses.

If the three major U.S. stock indexes end lower, the market will snap a four-day streak of gains.

Bernanke, in his testimony to the U.S. House of Representatives Financial Services Committee, gave a mixed view of the U.S. economy, and did nothing to support hopes by some in the financial markets that more monetary stimulus may be coming.

"It felt as if there's been improvement ... (but) it certainly didn't sound like they were getting ready to tighten," said Eric Kuby, chief investment officer of North Star Investment Management Corp. in Chicago.

The Fed chairman's comments drove the dollar up 0.6 percent against a basket of major currencies and sent materials lower. Gold fell. The S&P Materials Index shed 1.4 percent.

Earlier in the session, the Nasdaq topped 3,000 for the first time since mid-December 2000.

Among reports helping to limit losses, the Fed said in its Beige Book that the U.S. economy expanded modestly in January and through mid-February.

The Dow Jones industrial average was down 25.13 points, or 0.20 percent, at 12,979.99. The Standard & Poor's 500 Index was down 2.76 points, or 0.20 percent, at 1,369.42. The Nasdaq Composite Index was down 10.17 points, or 0.34 percent, at 2,976.59.

Traders also booked some profits after the three major U.S. stock indexes hit multi-year highs earlier in the session on stronger-than-expected economic data.

Analysts warned that the year's rally has come on light volume, noting that hitting new highs could spark selling on technical triggers.

In February, daily volume on the New York Stock Exchange, NYSE Amex and Nasdaq has averaged 6.87 billion shares. Last year, the average daily volume in February was 7.81 billion.

Other economic data showed the U.S. economy grew slightly faster than initially thought in the fourth quarter while the pace of business activity in the U.S. Midwest picked up in February to its highest level in 10 months.

With improvement in new orders and employment gauges, the Purchasing Managers Index advanced the perception of a continuing recovery in key U.S. economic sectors. The optimism has driven the S&P 500 up more than 9 percent for the year.

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