NEW YORK (CNNMoney.com) -- Blue-chip stocks slumped Wednesday as worries about slower economic growth and its effect on profits overshadowed upbeat earnings from tech leader Cisco Systems.

The Dow Jones industrial average (down 97.41 to 11,076.18, Charts) tumbled 0.9 percent, and the broader Standard & Poor's 500 (down 5.53 to 1,265.95, Charts) index lost 0.4 percent.

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The tech-fueled Nasdaq composite (down 0.57 to 2,060.28, Charts) ended the session little changed, after having risen as much as 1.8 percent during the session.

A bullish earnings report and forecast from Cisco Systems helped stocks storm out of the gate early in the session. Cisco (up $2.49 to $19.78, Charts) shares surged more than 14 percent and gave a lift to other techs.

But the rally fizzled out in the afternoon, as investors eyed rising Treasury bond yields and continued to digest the previous session's Federal Reserve decision and statement.

"The Fed said in the statement that the economy is slowing, and while that might help curb inflation, it's ultimately a negative on earnings per share," said Paul H. Levine, president at Lifetime Financial Strategies.

"The falling stock market is projecting out a slower economy and slower profit growth," he added.

After the close of trade Wednesday, AIG (Charts) reported quarterly earnings that fell from a year ago, but excluding charges, beat analysts' estimates. Shares inched higher in extended-hours trading after falling 1.8 percent during the regular session.

Other stocks likely to be active Thursday include JC Penney (Charts), Target (Charts) and EchoStar (Charts), all of which are expected to report quarterly earnings.

Thursday also brings the June trade balance and the weekly report on jobless claims.

The central bank held interest rates steady Tuesday after two years of rate hikes, essentially saying that the economic slowdown will take the edge off the rise in inflation going forward. However, in the event that doesn't prove true, the bankers also left the door open for more rate hikes.

The pause was expected by the market, and stocks showed only a muted reaction Tuesday, but the reality of slower growth and how it may hit corporate profits seemed to sink in Wednesday afternoon.

The Fed raises rates to slow growth and cuts them to juice the economy. Investors have been worried that the central bank might raise rates too high as it tries to control inflation, and spark a recession. But now there are worries that the Fed might err on the other side and let inflation get out of control.

The economy grew at a 2.5 percent rate in the second quarter, less than half of the first quarter's pace, and slow growth can put pressure on corporate profits.

On the economic front, a report showed wholesale inventories rose 0.8 percent, slightly above expectations.

The light summer trading volume also contributed to the market's inability to hold on to the morning rally, said David Briggs, head of equity trading at Federated Investors

"The market just doesn't have enough momentum or interested buyers to follow through" Briggs said.

The sluggishness is also seasonal. August and September are typically the worst months of the year for stocks.

"It's basically a combination of summer doldrums and the fact that there's not much good news to look forward to," said Michael Metz, chief investment strategist at Oppenheimer.

The fluctuations in the oil market added to Wednesday's stock gyrations.

Oil prices jumped after a weekly inventory report showed a decline in fuel supplies but pared gains by the close. U.S. light crude for September delivery rose 4 cents to settle at $76.35 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $4.90 to settle at $662.20 an ounce.

Treasury prices eased, leaving the yield on the benchmark 10-year note at 4.93 percent, up from 4.92 percent late Tuesday. Treasury prices and yields move in opposite directions.

The dollar fell against the euro and the yen.

Of the 30 stocks in the Dow, 22 fell and eight gained.

Economically sensitive components Caterpillar (down $3.08 to $68.52, Charts), Honeywell (down $0.82 to $37.12, Charts) and United Technologies (down $1.57 to $60.31, Charts) sank.

Elsewhere, luxury homebuilder Toll Brothers reported preliminary results for its latest quarter that came in below expectations. The company also said it expects to sell fewer homes than it previously thought in the current quarter.

Shares of Toll Brothers (down $1.70 to $24.88, Charts) sank 6.4 percent, while the Dow Jones U.S. Home Construction (Charts) index skidded 4.5 percent.

On the earnings front, Disney (down $0.15 to $28.83, Charts) said its profit soared 39 percent in the latest quarter. Shares jumped as much as 3.7 percent before closing lower.

Federated Department Stores (up $0.67 to $34.46, Charts) said its quarterly profit rose and raised its outlook for the second half of the year. Shares of the company, which owns Macy's and Bloomingdale's, added 2 percent.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of 9 to 7 on volume of 1.7 billion shares. On the Nasdaq, losers topped winners by a margin of 3 to 2 as 2.12 billion shares changed hands.

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