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Stocks erased their early gains to turn flat on Wednesday, but Federal Reserve Chairman Ben Bernanke's reassuring remarks kept a limit on losses.
Bernanke reiterated the central bank's plan to start paring back its bond-purchase program later this year, but said that could change if the economic outlook shifted.
"Our asset purchases depend on economic and financial developments, but they are by no means on a preset course," the Fed chief said in prepared remarks to the U.S. House of Representatives Financial Services Committee.
The Dow Jones Industrial Average initially rose over 40 points after Bernanke spoke, but later it toggled in and out of negative territory and was up 24 points in early afternoon trading. Bank of America led the gainers, while American Express slumped. The blue-chip index traded in a relatively narrow 65-point range.
The S&P 500 and the Nasdaq held modest gains. Both indexes had finished lower for the first time in nine sessions on Tuesday. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.
Most key S&P sectors remained in positive territory, led by materials, while utilities turned lower.
Bernanke said the pace of asset purchases could be reduced "somewhat more quickly" if economic conditions were to improve faster than expected. On the other hand, the current $85 billion monthly pace "could be maintained for longer" if the labor market outlook darkened, or inflation did not look like it was rising back toward the Fed's 2 percent goal.
"The prepared remarks from Bernanke's testimony do not appear to break any new ground," Brown Brothers Harriman said in a note. "They reflect what has said recently and several times he drives home this point...The short-term market participants are reading Bernanke's comments dovishly."
On the economic front, housing starts tumbled 9.9 percent in June to a seasonally adjusted annual rate of 836,000 units, according to the Commerce Department, the lowest level since last August. Economists polled by Reuters had expected groundbreaking to rise to a 959,000-unit rate last month.
Mortgage applications fell last week, due to a decline in demand for refinancing loans as mortgage interest rates remained at a two-year high, according to the Mortgage Bankers Association.
Also, the Fed was releasing the monthly Beige Book, its region-by-region assessment of the U.S. economy, later on Wednesday.
Among earnings, Bank of America climbed after the financial giant posted a 70 percent jump in earnings, thanks to lower operating expenses.
(Read More:Enjoy it while it lasts: Bank earnings face trouble)
Analysts expect S&P 500 companies' second-quarter earnings to have grown 3 percent from a year earlier, with revenue up 1.5 percent, according to the latest data from Thomson Reuters.
In addition, the Delivering Alpha conference, produced by CNBC and Institutional Investor, will take place in New York, featuring major investors including Carl Icahn, Nelson Peltz and John Paulson.
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