US STOCKS closed lower on Wednesday

The Standard & Poor’s 500 Index retreated the most in two weeks as Federal Reserve Chairman Ben S. Bernanke said the central bank may reduce bond purchases later this year as the economy strengthens.

The S&P 500 (SPX) lost 1.4% to 1,628.93 at 4 p.m. in New York, for the largest decline since May 31. 

The index rallied 1.5% in the previous two sessions. The Dow Jones Industrial Average dropped 206.04 points, or 1.4%, to 15,112.19.

The Fed may “moderate” its pace of bond purchases later this year and may end them around mid-2014, Bernanke said. The Federal Open Market Committee said at the conclusion of a two-day meeting in Washington that risks to the outlook for the economy and the labor market have “diminished since the fall.”

The central bank said it will keep buying bonds at a pace of $85 billion a month, and repeated that it’s prepared to increase or reduce the pace of purchases depending on the outlook for the job market and inflation.

Fed officials forecast the U.S. unemployment rate will fall to 6.5% to 6.8% by the end of 2014, possibly reaching its stated threshold to raise the benchmark lending rate. The FOMC also anticipates that inflation over the medium term likely will run at or below its 2% objective.

U.S. central bankers in December linked changes in the benchmark borrowing cost to the outlook for employment and prices. The FOMC said the rate will remain in a range of zero to 0.25 percent so long as unemployment remains above 6.5 percent and the outlook for inflation is no higher than 2.5 percent. The nation’s jobless rate in May was 7.6 percent.

All 10 groups in the S&P 500 fell, with telephone and utility shares leading losses. Verizon Communications Inc. (VZ) and Travelers Cos. tumbled at least 2.2 percent, pacing declines among the largest companies. 

Sprint Nextel Corp. declined 4.4 percent after Dish Network Corp. (DISH) said it won’t make a new offer for the mobile-phone carrier by a deadline. Adobe Systems Inc. (ADBE) rose 5.6 percent after reporting second-quarter profit that topped forecasts.

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