Stock rally fades as Bernanke kills stimulus buzz

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NEW YORK (CNNMoney) -- U.S. stocks ended mixed Thursday, trimming gains from earlier in the day, as comments from Ben Bernanke tempered hopes for immediate stimulus by the Federal Reserve.

The Dow Jones industrial average (INDU) rose 46 points, or 0.4%, to end at 12,461. The S&P 500 (SPX) closed little changed at 1,315. The Nasdaq (COMP) fell 14 points, or 0.5%, to 2,831.

Rangold Resources (GOLD) was the biggest drag on the Nasdaq as gold prices sank 2.8% to below $1,600 an ounce.

United Technologies (UTX, Fortune 500) and Procter & Gamble (PG, Fortune 500) were the best performing stocks on the Dow, while Bank of America (BAC, Fortune 500) and Hewelett Packard (HPQ, Fortune 500) weighed on the index.

Stocks opened sharply higher after China's central bank cut its range of lending and deposit rates by a quarter percentage point in an effort to address the slowdown in the nation's manufacturing sector.

But the indexes pulled back after Fed chairman Ben Bernanke told Congress that the central bank stands ready to act, but gave no indication that additional easing is imminent.

"There has been a lot of speculation in the market about a coordinated central bank intervention," said Ryan Larson, a senior equity trader at RBC Global Asset Management. However, he said the optimism has faded "now that it has become apparent that the Fed is ready to act, but is holding off for the time being."

Bernanke's testimony came after other Fed officials, including Vice Chair Janet Yellen and San Francisco Fed president John Williams, indicated that more stimulus by the central bank might be necessary to boost the sputtering U.S. economy.

Investors have been hopeful that the Fed will extend Operation Twist -- its program of swapping short-term bonds for ones with longer duration to help keep 10-year and 30-year bond yields low -- or launch a third round of asset purchases known as quantitative easing.

Meanwhile, the Spanish government held a successful bond auction Thursday, two days after its Treasury minister warned the country was at risk of being shut out of financial markets.

But in a sign of the nation's ongoing banking and economic problems, ratings agency Fitch downgraded Spain's credit rating to "BBB" from "A."

The debt crisis in Europe "poses significant risks to the U.S. financial system and economy, and must be monitored closely," said Bernanke.

U.S. stocks rallied Wednesday, with the Dow and S&P 500 logging their best gains of the year, as investors grew hopeful that more stimulus for the global economy is around the corner.

Economy: First-time claims for unemployment insurance totaled 377,000 in the week ended June 2, the Labor Department said. That's 2,000 more than the consensus forecast, but 12,000 below the prior week.

The net worth of households rose a collective $2.8 trillion in the first three months of 2012, according to data from the Federal Reserve.

Companies: Yoga clothing retailer Lululemon Athletic (LULU) plunged after releasing a weak outlook along with its first-quarter results.

Best Buy (BBY, Fortune 500) shares sank after the retailer's founder and largest shareholder, Richard Schulze, announced plans to resign as chairman and a director.

Food producer J.P. Smucker (SJM, Fortune 500) reported that operating earnings per share rose 10 cents to $1.10, better than the drop of 1 cent per share forecast by analysts.

Nasdaq OX Group (NDAQ), which operates the Nasdaq stock exchange, announced its plans to spend $40 million to compensate trading firms for losses caused by glitches that delayed Facebook's (FB) debut. On Wednesday, Nasdaq CEO Bob Reified apologized for the problems but said affected investors should talk to their brokers.

Korean electronics-maker Samsung named a new chief executive Thursday. The Wall Street Journal reported that the company also intends to launch its new smartphone as planned, despite Apple (AAPL, Fortune 500) seeking an injunction against its sales as part of a patent infringement lawsuit.

Shares of Apple edged higher, while Samsung shares closed up 5% in trading in South Korea.

World markets: European stocks closed higher. France's CAC 40 (CAC40) surged 3.1% following the China rate cut, the DAX (DAX) in Germany rallied 3%, and Britain's FTSE 100 (UKX) added 1.1%.

The Bank of England made no changes to its monetary policy, despite a deteriorating economic outlook.

Asian markets ended mixed. The Shanghai Composite (SHCOMP) eased 0.7%, but the Hang Seng (HSI) in Hong Kong gained 0.7% and Japan's Nikkei (N225) finished 1.2% higher.

Currencies and commodities: The dollar rose against the yen, but slipped against the euro and British pound.

Oil for July delivery fell 20 cents to end at $84.82 a barrel.

Gold futures for August delivery fell $46.20 to settle at $1,588 an ounce.

Bonds: The benchmark 10-year U.S. Treasury gave up earlier gains after the China announcement, leaving the price little changed and the yield at the 1.65% level reached late Wednesday.