5:00PM EST: U.S. stocks fell for a third day on concern lawmakers will derail a White House plan to bail out banks even as Federal Reserve Chairman Ben S. Bernanke warned of “grave threats” facing the American economy.

The Standard & Poor’s 500 Index swung between gains and losses more than 40 times as Bernanke fended off congressional criticism of the $700 billion rescue proposal and investors weighed the benefits of Warren Buffett’s $5 billion investment in Goldman Sachs Group Inc.Washington Mutual Inc. tumbled 29 percent, Citigroup Inc. sank 5.2 percent and Morgan Stanley lost 11 percent.

Two stocks retreated for each that gained on the New York Stock Exchange. The S&P 500 slipped 2.23 points, or 0.2 percent, to 1,185.99. The Dow Jones Industrial Average dropped 29, or 0.3 percent, to 10,825.17. The Nasdaq Composite Index increased 2.35, or 0.1 percent, to 2,155.68, led by a rally in chipmakers.

(Bloomberg.com)