While Greenspan said the economy has "regained some traction" after the summer's slowdown, investors looked past his congressional testimony, focusing instead on uncertainty about the health of the economy, third-quarter earnings pre-announcements and fiscal policy.

Greenspan gave no strong indications whether the Fed would raise interest rates at its meeting Sept. 21. While many analysts believe a quarter percentage point increase is likely, others wonder if election year politics will cause the Fed to skip a rate hike until November. The benchmark rate stands at 1.5 percent.

"Between the economy the way it is and the election coming up, I don't think the Fed will raise rates this month," said David Legeay, senior vice president at McDonald Financial Group. "It's still a show-me recovery, and a lot of businesses are waiting to see how the economy fares and what the Fed will do before they make any big investments."

According to preliminary calculations, the Dow Jones industrial average fell 29.43, or 0.3 percent, to 10,313.36.

Broader stock indicators were also lower. The Standard & Poor's 500 index was down 5.03, or 0.4 percent, at 1,116.27, while the Nasdaq composite index dropped 7.92, or 0.4 percent, to 1,850.64.

With terror fears fading after the close of the political conventions and oil prices on the decline, investors are firmly focused on economic numbers, with an eye toward how the Fed will interpret the data when it looks at interest rates.

Since third-quarter earnings will likely be reduced because of the summer's high oil prices, the market has mostly discounted the upcoming earnings season — even though double digit profit growth is still likely — with hopes of a resurgence in profits in the fourth quarter to go along with the elections and, hopefully, more strength in the economy.

Despite his cautiously optimistic assessment, Greenspan echoed Wall Street's concerns over oil prices, which have fallen from record highs in recent weeks but stubbornly remain above $40 per barrel. A barrel of light crude for October delivery was quoted at $42.77, down 54 cents, on the New York Mercantile Exchange.

Shares in Wal-Mart Stores Inc. were down 21 cents at $53.08 after the retailer's chief executive told an investing conference that Christmas sales would likely meet expectations.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 1.25 billion shares, compared to 1.21 billion yesterday.