Wall Street down as Bernanke rules out immediate stimulus

Stocks started off on up note after government report showed employers cut off less jobs last week. According to the Labour Department, the number of people filing for unemployment benefits dropped in the week ending July 9 to a seasonally adjusted 405,000, the lowest level in almost three months.

Also easing concerns, the Italian Senate Thursday approved a key austerity package aimed at convincing investors that the eurozone's third-largest economy won't be swept into the debt crisis.

However, gains were checked as Moody's Investors Service late Wednesday put the Aaa bond rating of the US on review for possible downgrade, given the rising possibility that the statutory debt limit will not be raised in time.

The rating agency said that the review of the US bond rating is prompted by the possibility that the debt limit will not be raised in time Aug 2, to prevent a missed payment of interest or principal on outstanding bonds and notes.

Stocks pared earlier gains in late morning session as investors rethought Bernanke's remarks. In his second day of testimony before Congress, Bernanke reiterated that the central bank would take extra actions to stimulus the economy if the outlook worsens, however, he said the Fed was not prepared to launch a third round of quantitative easing at the moment.

JP Morgan Chase, the US second largest bank, posted better- than-expected second-quarter earnings Thursday, driving its stocks nearly 2 percent up.

Google's shares surged after-hours after ending the session lower as the search giant delivered a blowout quarter, beating on both earnings and revenue.

In other markets, the US dollar traded mixed against its major counterparts, while oil plunged more than 2.4 percent to settle at $95.69 a barrel on the New York Mercantile Exchange.

As of Thursday's close, the Dow Jones industrial average dropped 54.49 points, or 0.44 percent, to 12,437.12. The Standard & Poor's 500 lost 8.85 points, or 0.67 percent, to 1,308.87. The Nasdaq Composite Index fell 34.25 points, or 1.22 percent, to 2, 762.67.