With Bernanke saying little to inspire the market in light pre-holiday trading, investors decided against making any major moves in advance of tomorrow's report on nonfarm payrolls. The Fed chairman, speaking before an economic and development conference in South Carolina, said productivity growth is "likely to continue for some time." He said recent reports showing a short-term slowing in productivity didn't change his view.

There are questions on Wall Street about whether the economy has slowed enough to ward off further interest rate hikes — or whether the Fed's 17 straight increases since 2004 might have tipped the economy too far. Productivity gains make it easier for the Fed to maintain a stable rate policy.

The market was hard-pressed to hold on to gains from early in the session. It ultimately had little response to a Commerce Department report that consumer spending rose in July and that core consumer inflation eased, signaling that the current economic slowdown might not be as severe as some have feared.

Also today, the Labor Department released figures showing a drop in the number of recently laid off workers filing for unemployment benefits.

According to preliminary calculations, the Dow Jones industrial average was modestly lower, down 1.76, or 0.02 percent, at 11,381.15. The Dow showed gains in each of the previous three sessions, and is now at a three-month high. For August overall, the Dow rose 1.8 percent, its best showing since April.

Broader stock indicators also declined today. The Standard & Poor's 500 index fell 0.45, or 0.03 percent, to 1,303.82, while the Nasdaq composite index dropped 1.98, or 0.09 percent, to 2,183.75. The S&P 500 had its strongest month since January, rising 2.2 percent, while the Nasdaq added 4.6 percent for its best month since November.

"I didn't think any major market moving number came out, everything was in line with what was expected," said David Sowerby, chief market analyst at Loomis, Sayles & Co. "We're not getting anything earth-moving out of a majority of the retail sales reports. And, as for Bernanke, there's been enough that's trickled out of the Fed for investors to feel there's a better chance for neutrality versus a month ago."

Scott Wren, senior equity strategist at A.G. Edwards & Sons, contends the markets did a good job anticipating inflation and consumer spending levels and said all eyes now turn to the unemployment report. "I think we've really seen a move up here lately in the past couple of weeks based on the expectation for lower inflation." He predicts inflation will remain at "modest levels."

In bonds, the yield on the benchmark 10-year Treasury note fell to 4.73 percent from 4.76 percent late yesterday. The dollar was mixed against other major currencies, while gold prices rose.

Oil prices, which have generally eased as Tropical Storm Ernesto veered away from oil infrastructure along the Gulf coast, advanced amid continuing political tensions with Iran over its nuclear program. Crude prices settled up 23 cents to $70.26 a barrel on the New York Mercantile Exchange.

In corporate news, several retailers posted strong same-store sales in August, the crucial back-to-school buying period. Wal-Mart Stores Inc., Limited Brands Inc., as well as Macy's and Bloomingdale's parent Federated Department Stores Inc. posted gains. Wal-Mart rose 10 cents to $44.72, while Limited gained 54 cents, or 2.14 percent, to trade at $25.73. Federated rose 51 cents to $37.98.

Also in focus, Ford Motor Co. said it is considering the sale of all or part of its Aston Martin luxury brand as the automaker works to generate cash for its North American turnaround plan. News of Ford's latest plan pushed the shares up 10 cents, or 1.21 percent, to $8.37.

Goldcorp Inc., a Canadian gold producer, has agreed to buy rival Glamis Gold Ltd. for about $8.6 billion in stock. Goldcorp shares fell $2.81, or 9.22 percent, to $27.66 after it announced an agreement to acquire Glamis, which will create one of the world's largest gold producers. Glamis shares surged $7.26, or 19 percent, to $46.12.

Dow Chemical Co. gained 23 cents to $38.13 after announcing plans to close several plants outside the United States to trim annual operating costs by $160 million. As a result, the company plans to book a third-quarter charge of $550 million to $650 million.

Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange, where volume came to 1.34 billion shares, compared with 1.29 billion traded yesterday.

The Russell 2000 index of smaller companies was down 0.05, or 0.01 percent, at 720.53.

Overseas, Japan's Nikkei stock closed up 1.69 percent. At the close, Britain's FTSE 100 was down 0.39 percent, Germany's DAX index dropped 0.14 percent, and France's CAC-40 was down 0.34 percent.