Market Wrap for Wednesday, May 22: Stocks Pullback As Bernanke Says Bond Buying Could Slow

In Congressional testimony on Wednesday, Federal Reserve Chairman Ben Bernanke said that the central bank could begin winding down its $85 billion-per-month bond-buying program at one of its "next few meetings."

Minutes from the May FOMC meeting, however, showed that there is no consensus about when to begin pulling back on the stimulus. The decision will likely be significantly influenced by the trajectory of the economy in coming months.

The comments spooked investors who have been enjoying a near continuous rally in in U.S. stocks in 2013. The major averages fell throughout much of the session and closed near their worst levels.

Major Averages

The Dow Jones Industrial Average lost 80 points, or 0.52 percent, to 15,307.

The S&P 500 fell 14 points, or 0.83 percent, to 1,655.

The Nasdaq shed almost 39 points, or 1.11 percent, to 3,463.

Existing Home Sales

Home sales improved slightly in April, rising to 4.97 million from 4.94 million in March. Nevertheless, this came in below consensus expectations calling for an increase to 4.98 million.

Commodities

Crude oil prices fell along with the stock market on Wednesday. Late in the day, NYMEX crude futures were down around 2 percent to $94.20. Brent crude futures had lost 1.35 percent to $102.51. Natural gas was last trading down 0.14 percent to $4.19.

Precious metals also fell along with the market. Heading into the close of equities, COMEX gold futures were down 1.35 percent to $1,359.00. Silver contracts had lost a little less than 1 percent to $22.25. Copper futures were last up 0.51 percent on Wednesday.

The grain complex was higher across the board on the session. At last check, corn futures were trading up almost 3 percent while wheat had added 1.18 percent. Movers in soft commodities included coffee, which fell more than 3 percent, and orange juice, which rose a little more than 2 percent.

Bonds

Late in the day, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was down around 1.50 percent to $116.09. The steep fall in bond prices pushed yields higher on the session.

The 2-Year Note yield was last up one basis point to 0.24 percent. The yield on the 5-Year Note surged seven basis points to 0.89 percent on the day.

The 10-Year Note yield and 30-Year Bond yield added ten and eight basis points to 2.03 percent and 3.21 percent, respectively.

Currencies

The U.S. dollar rose on Wednesday. Near the close of the stock market the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was up 0.48 percent to $22.90.

The closely watched EUR/USD pair fell 0.35 percent to $1.2865. The only other significant mover on the day was the AUD/USD, which lost 0.64 percent.

Volatility and Volume

The CBOE Volatility Index (VIX) rose on the day as markets fell. The gains, however, were limited and volatility expectations remain low. Late in the day, the VIX was trading up a little better than 5 percent to 14.07.

Volume was very heavy on the session as investors reacted to comments made by the Fed chief. Around 210 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 124 million.

Stock Movers

MannKind (NASDAQ:MNKD) climbed almost 14 percent on the session after a poster on Seeking Alpha argued that the biotech firm is a ripe takeover target.

Retailer Saks (NYSE:SKS) jumped almost 14 percent near the close after the company hired Goldman Sachs to explore potential strategic alternatives, including a sale.

Shares of Booz Allen Hamilton (NYSE:BAH) jumped almost 8 percent after the company's fiscal fourth-quarter earnings results.

Zale (NYSE:ZLC) climbed almost 23 percent on Wednesday after the company reported a surprise profit in its fiscal third-quarter.

Bristol Myers Squibb (NYSE:BMY) climbed around 5 percent after analysts at Citigroup upgraded the stock to Buy and raised their price target.

SolarWinds (NYSE:SWI) plunged around 14 percent on Wednesday after the company agreed to acquire N-able Technologies for $120 million.

Infinity Pharmaceuticals (NASDAQ:INFI) lost 8 percent on the day. The volatility in the share price does not appear to have been linked to any significant news.

Shares of CVR Partners LP (NYSE:UAN) fell almost 9 percent late in the day after a public share offering priced at a discount to Tuesday's closing price.

AMAG Pharmaceuticals (NASDAQ:AMAG) lost almost 11 percent on the session after the company said its distributor has recalled a batch of ferumoxytol, an iron deficiency treatment, after a death in Switzerland.

Chinese internet company YY Inc. (NASDAQ:YY) fell almost 17 percent on the session, although the reason for the move was not readily apparent. The stock had been surging in recent days and the correction was likely due to profit taking.