Stocks keep retreating

NEW YORK (CNNMoney.com) -- Stocks paused from their record-setting run Wednesday on hawkish comments from Federal Reserve Chairman Ben Bernanke, renewed subprime fears and disappointing results from tech giants Intel, Yahoo.

The Dow Jones industrial average (Charts) declined about 0.4 percent an hour into the session.

The broader S&P 500 (down 6.93 to 1,542.44, Charts) eased over 0.4 percent, while the tech-laden Nasdaq (down 21.75 to 2,690.54, Charts) fell over 0.7 percent.

On Tuesday, the Dow Jones industrial average finished in record territory for the fourth straight session, after climbing above the 14,000 mark for the first time ever.

But investors were jittery Wednesday following comments from Federal Reserve Chairman Ben Bernanke and some disappointing earnings from the tech sector.

In prepared testimony to a Congressional committee, the Fed chief said that he sees moderate economic growth this year, but said that the central bank is still wary about inflation.

Bernanke's hawkish stance lowered Wall Street expectations that the Fed will cut interest rates anytime soon.

Wall Street cringed late Tuesday after Internet search firm Yahoo (down $1.30 to $26.22, Charts, Fortune 500) lowered its 2007 sales outlook after posting in-line quarterly results late Tuesday.

Intel (down $1.14 to $25.19, Charts, Fortune 500) also reported earnings that met analysts' consensus estimates after the closing bell Tuesday, but the chipmaker's gross margin - a key measure of profitability - disappointed investors.

Both Yahoo and Intel shares fell over 4 percent in morning trade.

Renewed concerns about the extent of the fallout from problems in the subprime mortgage sector also pressured investor sentiment. Two Bear Stearns (down $1.26 to $138.65, Charts, Fortune 500) hedge funds heavily invested in securities backed by subprime mortgages are nearly worthless, according to a report in the Wall Street Journal.

On the economic front, prices paid by consumers rose slightly more than expected in June, but so-called core CPI, which strips out food and energy prices, fell in line with Wall Street expectations.

Housing starts climbed in June, but applications for new projects, a key measure of builder confidence, fell more than expected, the Census Bureau reported Wednesday.

On the earnings front, JPMorgan Chase reported a better-than-expected increase in quarterly results before the bell Wednesday, driven by strong investment banking results. JP Morgan (down $1.13 to $48.79, Charts, Fortune 500) shares were over 2 percent lower on the New York Stock Exchange.

Drugmaker Pfizer (down $0.80 to $25.16, Charts, Fortune 500), meanwhile, posted a decline in quarterly profit, hurt by generic competition, sending its shares over 3 percent in morning trade.

Macy's (up $3.74 to $43.77, Charts) shares soared nearly 9 percent following a report by Women's Wear Daily that private equity firm KKR is reportedly mulling a $24 billion bid for the retailer in conjunction with Goldman Sachs.

The earnings deluge will continue Wednesday, with Dow component IBM (up $0.69 to $111.46, Charts, Fortune 500) among the companies set to report results after the market close.

In corporate news, the board of Dow Jones (down $0.47 to $55.98, Charts) backed the $5 billion takeover offer from Rupert Murdoch's News Corp (down $0.03 to $24.22, Charts, Fortune 500). Approval from the controlling Bancroft family is still needed for the deal to go ahead.

Oil prices gained just ahead of the weekly inventory report. U.S. light crude for August delivery added 53 cents to $74.55 a barrel on the New York Mercantile Exchange.

Treasury prices climbed, lowering the yield on the benchmark 10-year note to 5.03 percent from 5.07 percent late Tuesday. Bond prices and yields move in opposite directions.

The dollar rose slightly against the euro and weakened against the yen.

In global trade, European stocks fell sharply, and Asian markets finished the session lower.