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Stocks Finish Lower, Erasing Early Gains

Major indexes faltered in late trading Wednesday after a Fed official's cautionary comments on inflation

Major U.S. stock indexes closed lower Wednesday, erasing earlier gains, after Philadelphia Fed President Charles Plosser warned that the Federal Reserve remains vigilant on inflation, even as the economy slows. Market observers said Plosser's comments put to the test investors' hopes that the Fed will lower interest rates further to stimulate the economy, according to S&P MarketScope.

Equities had rebounded earlier in the session as solid productivity gains in the fourth quarter and a better-than-expected earnings report from Disney (DIS) helped to allay investors’ worries about a recession that many believe is either imminent or has already arrived.