U.S. stocks slid on Wednesday after crude oil prices ended above $53 a barrel, while the dollar strengthened and gold eased.
U.S. bonds ended narrowly mixed.
Crude futures in New York ended at a four-month high as a series of refinery troubles in Texas sparked fresh buying.
Rising oil prices pressure the stock market in general, as they curb consumer spending and cut into corporate profits, although they boosted shares of energy companies.
Federal Reserve Chairman Alan Greenspan told the House Budget Committee the U.S. economy is growing at a "reasonably good pace" but warned dangerous budget deficits must be fixed, preferably through spending cuts.
Market strategists saw the central bank chief's remarks as keeping the status quo of steady interest-rate hikes rather than aggressive rises.
"I didn't think there was anything surprising in terms of (Greenspan's) comments," said Owen Fitzpatrick, head of U.S. Equity Group at Deutsche Bank Private Wealth Management.
Shares of Citigroup Inc. ended up 25 cents at $48.13.
The Dow Jones industrial average was down 18.03 points, or 0.17 percent, at 10,811.97. The Standard & Poor's 500 Index was down 0.33 point, or 0.03 percent, at 1,210.08. The Nasdaq Composite Index was down 3.75 points, or 0.18 percent, at 2,067.50.
Earlier, the Dow touched a 3 1/2-year intraday high and the S&P hit a two-month intraday high.
Exxon Mobil Corp. rose nearly 1 percent, or 58 cents, to $62.68, while ChevronTexaco Corp. rose 1 percent, or 63 cents, to $61.57. BONDS MIXED, DOLLAR FIRMS.
In the bond market, the absence of any direct mention of monetary policy or inflation in Greenspan's testimony offered investors some relief.
The benchmark 10-year note was off 3/32 for a yield of 4.38 percent, up from 4.37 percent on Tuesday. Yields had earlier touched a fresh three-month high of 4.41 percent.
The 30-year bond (US30YT=RR: Quote, Profile, Research) lost 13/32 in price, taking yields to 4.74 percent from 4.72 percent late Tuesday.
The two-year note yields eased to 3.57 from 3.58 percent.
Gains in the dollar were partially eroded by Greenspan's comments that the United States must tackle budget deficits by restraining spending.
By late afternoon in New York, the euro was down 0.4 percent at $1.3130. The dollar rose 0.3 percent to 104.70 yen . CRUDE RISES, GOLD EASES
On the New York Mercantile Exchange, crude for April delivery rose $1.37 to settle at $53.05 a barrel, after hitting $53.09, the highest since $55.65 on Oct. 27. The all-time NYMEX record of $55.67 was struck on Oct. 25.
U.S. gold futures settled easier but above eight-day lows, tracking the euro mostly, analysts said. Gold for April delivery on the COMEX division of the NYMEX slipped 10 cents to conclude at $433.80 an ounce, after trading between $429.80 -- its lowest level since Feb. 22 -- and $435.00. EUROPEAN SHARES MIXED, NIKKEI RISES
European shares closed mixed as Belgian brewer InBev, miners and utilities weighed, while oil price gains and higher bond yields added to a bearish brew.
The FTSEurofirst 300 index ended off 0.01 percent at 1,100.21 points. The DJ Euro Stoxx 50 index edged up 0.14 percent to 3,082.71 points.
In Tokyo, the Nikkei share average rose for a fifth day to hit an eight-month closing high, buoyed by gains in Nomura Holdings and other brokers on hopes a rise in market activity will help boost revenues.
The Nikkei ended up 0.28 percent or 33.18 points at 11,813.71.