Federal Reserve Chairman Alan Greenspan told the Senate Banking Committee the economy is in good health, but said interest rates are still "fairly low" after six straight increases, which was viewed as confirmation that more interest-rate hikes lie ahead.
While that helped support the overall market, it hurt interest-rate-sensitive stocks such as banks and financial services companies. The S&P index of financial stocks fell 0.6 percent.
"Greenspan was clearly the story of the day and he didn't say anything unexpected - and the market doesn't like uncertainty," said David Memmott, head of listed block trading, Morgan Stanley.
The Dow Jones industrial average was down 2.44 points, or 0.02 percent, to end at 10,834.88. The Standard & Poor's 500 Index edged up just 0.22 of a point, or 0.02 percent, to finish at 1,210.34. The Nasdaq Composite Index was down 1.78 points, or 0.09 percent, to close at 2,087.43.
The S&P 500's slim gain to a fresh high for the year marked its longest winning streak since a rally that started in late October 2004.
After the closing bell, Hewlett-Packard Co rose 2 percent to $21.50, as it posted a quarterly profit that rose slightly, helped by gains across all of its businesses. Trading was active, with 1.49 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 1.89 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year. Advancers outnumbered decliners on the New York Stock Exchange by about 9 to 8 and by about 16 to 15 on Nasdaq.
Among the gainers, Exxon Mobil rose 2.7 percent, or $1.56, to $58.48, while ConocoPhilips gained 2.9 percent, or $2.93, to $104.31. The S&P Energy Industry Group index rose 2.73 percent. Of the 28 stocks in the group, 16 hit lifetime highs on Wednesday.
While high oil prices are a negative for stocks overall as they squeeze company earnings and cut consumer spending, they help oil companies. NYMEX crude for March delivery ended well above $48 a barrel, hitting its highest price in almost three weeks to settle $1.07 higher at $48.33 a barrel.
Interest-rate-sensitive stocks such as financials were lower as Greenspan said in congressional testimony that even after six quarter-percentage-point hikes since June, the official federal funds rate "remains fairly low."
Citigroup Inc declined 22 cents to $49.18, Wachovia Corp dropped 37 cents to $54.54 and Bank of America Corp fell 29 cents to $46.77. Among gainers, Coca-Cola Co rose 65 cents, or 1.5 percent, to $43.30 after it reported higher quarterly net income.