Further exasperating investors was a rally in oil and natural gas prices, which helped push blue chips lower and reinforced concerns that consumer spending will weaken. Stocks have retreated this week on questions about whether the economy is heading for a soft landing.

With little to guide them in slow summer trading, investors dwelled on the week's sluggish housing and durable goods data. Traders had hoped Bernanke might sound a more dovish tone after another Fed official said interest rate hikes might still be in store this year.

"Without anything from Bernanke, the theme of the week is that there's now a negative shift in opinion about the economy due to housing data," said Arthur Hogan, chief market analyst at Jefferies & Co. "Don't forget volume is light, there's not that many buyers and sellers out there, and that will push the market in one direction without much effort."

The Dow Jones industrial average fell 20.41, or 0.18 percent, to 11,284.05.

Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index slipped 0.97, or 0.08 percent, to 1,295.09, and the Nasdaq composite rose 3.18, or 0.15 percent, to 2,140.29.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.79 percent from late yesterday's 4.81 percent. The dollar was mixed against other major currencies, while gold prices rose.

For the week, the Dow ended down 0.86 percent, the Nasdaq fell 1.09 percent, and the S&P 500 dropped 0.55 percent.

Analysts said investors were waiting to see if stocks could latch on to a direction next week, when a batch of economic data including consumer confidence, job growth and manufacturing readings will be released. Many on Wall Street won't get back from vacation until after Labor Day, and could begin to digest and trade on these numbers then.

"There's still a coin toss to how people will respond, but we believe the focus on rates is going to diminish and people will look more at the economic data to see how severe the downturn is going to be," said Warren West, head trader at Greentree Brokerage Services in Philadelphia. "We're to stop celebrating a downturn, and start to worry it will be more than just a soft landing."

Many investors believe recent data suggests the Fed might have gone too far by raising rates 17 straight times in two years. If the economy moderates too quickly, that could erode corporate profit and consumer spending.

Also adding to the stock market's woes has been the direction of oil. Crude prices have crept higher on concern Iran, the world's fourth-largest producer, will blockade exports if its sanctioned over its nuclear program.

But, the most immediate fear is a storm south of Puerto Rico that could threaten Gulf of Mexico production sometime next week. A barrel of light sweet crude for October delivery rose 15 cents to $72.51 on the New York Mercantile Exchange.

Higher fuel prices pushed the Dow Jones transportation average — which measures U.S. transportation industry stocks — lower for the seventh straight week. Continental Airlines Inc. shares fell 43 cents to $22.96, while American Airlines parent AMR Corp. dropped 46 cents, or 2.3 percent, to $19.40.

Technology stocks moved moderately higher, with XM Satellite Radio Holdings Inc. rising 59 cents, or 4.6 percent, to $13.49. The company, whose shares were off nearly 54 percent from the start of the year, was given regulatory approval for three radio models with FM transmitters.

Sandisk Corp., which makes removable memory products used in electronics like digital cameras, was one of the Nasdaq's most heavily traded stocks after it was upgraded to a "Buy" rating from Caris & Co. Shares rose $1.60, or 3 percent, to $54.61.

Ford Motor Co. added 24 cents, or 3.1 percent, to $8 after former U.S. Treasury Secretary Robert E. Rubin resigned from the board, citing a potential conflict of interest with his duties as a member of the chairman's office at Citigroup Inc. There has been continued speculation the Ford family might take the company private, or pursue a sale or alliance with another automaker.

H&R Block Inc. shed $1.98, or 8.7 percent, to $20.81 after reporting late yesterday it is setting aside $102.1 million to cover possible losses from having to buy back mortgage loans as borrowers are increasingly missing their early payments. The warning pushed shares of banks with large mortgage businesses sharply lower.

Declining issues beat advancers by nearly 5 to 2 on the New York Stock Exchange, where preliminary consolidated volume came to 1.72 billion shares, compared to 2.08 billion yesterday.

The Russell 2000 index of smaller companies rose 0.52, or 0.07 percent, to 699.24.

Overseas, Japan's Nikkei stock average closed down 0.14 percent. At the close, Britain's FTSE 100 was up 0.16 percent, Germany's DAX index dropped 0.04 percent, and France's CAC-40 was tumbled 0.03 percent.

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The Dow Jones industrials ended the week down 97.42, or 0.86 percent, finishing at 11,284.05. The S&P 500 index lost 7.21, or 0.55 percent, to close at 1,295.09.

The Nasdaq fell 23.66, or 1.09 percent, to 2,140.29.

The Russell 2000 index closed the week down 12.44, or 1.75 percent, at 699.24.

The Dow Jones Wilshire 5000 Composite Index — a free-float weighted index that measures 5,000 U.S. based companies — ended the week at 12,921.56, down 217.62 points from last week. A year ago the index was 12,123.35.