Stocks slide on Bernanke, credit fears

NEW YORK (CNNMoney.com) -- Wall Street's stock selloff continued Thursday as remarks by Federal Reserve Chairman Ben Bernanke failed to comfort investors nervous about the credit market crisis and record high oil prices.

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

The tech-fueled Nasdaq (Charts) fell 1 percent, while the broader S&P 500 index (Charts) eased 0.1 percent.

Just a day earlier, major indexes nearly 3 percent lower, with the Dow industrials plunging 361 points - its fifth biggest point decline of the year.

Bernanke failed to offer any comfort to jittery investors, telling Congress' Joint Economic Committee that the central bank is concerned about the subprime mortgage crisis and sky-high oil prices, which pose a risk of higher inflation and slower economic growth.

Last week, the Fed cut the fed funds rate by a quarter percentage point, but hinted that it might not continue to cut rates when policymakers convene again in December.

Credit market fears, which sent stocks reeling, remained in focus after Morgan Stanley (Charts, Fortune 500) said late Wednesday it would take a $3.7 billion writedown because of bad bets on subprime mortgages. The news, however, followed much speculation that the investment bank would make such an announcement, sending Morgan Stanley shares 3.6 percent higher.

Dragging down the technology sector were shares of Cisco Systems (Charts, Fortune 500), which lost 6.7 percent after following analysts' predictions that corporations will scale back on technology spending in the months ahead. The network equipment maker reported improved earnings late Wednesday, but the results were not as strong as Wall Street had hoped.

Before the opening bell, Ford Motor Co. reported results that beat expectations. Ford (Charts, Fortune 500) shares climbed 2 percent in morning trade on the New York Stock Exchange.

Dow component American International Group (Charts, Fortune 500) reported disappointing results after the closing bell Wednesday, blaming the battered housing market and tighter credit conditions.

And media giant News Corp. (Charts, Fortune 500) reported a decline in earnings from a year ago after Wednesday's closing bell, although it topped analysts' expectations, helped by strong box office results from films such as "The Simpsons Movie".

Retail sales eased for the second straight month in October, major retailers reported Wednesday, a worrisome sign for this year's holiday shopping season.

Wal-Mart (Charts, Fortune 500), the world's largest retailer, reported an increase in sales at the low end of its forecast.

But wholesale club retailer Costco (Charts, Fortune 500) posted better-than-expected results, helped by strong sales outside the United States.

Oil prices retreated but continued to remain near record level as light, sweet crude for December rose 81 cents to $97.18 a barrel. Just a day earlier it reached a new trading high of $98.62 a barrel.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.30 percent from 4.33 percent late Wednesday.

In currency trading the dollar again eased against the euro after the European Central Bank voted to keep interest rates unchanged. The greenback was narrowly lower against the yen.

Overseas, Asian markets finished sharply lower, while European shares were mixed in midday trade.

Gold prices continued to climb as COMEX gold rose $8.50 to $842 an ounce.