Bernanke "faces his second day on the Hill today testifying about the Fed's recent decision to bail out Bear Stearns and who may be the next to fall; traders and investors still are skeptical that the worst is over," said Kevin Giddis, managing director in charge of fixed-income trading at Morgan Keegan & Co. Inc.
The Dow Jones Industrial Average fell 57.97 points to 12,547.86.
The S&P 500 declined 5.54 points to 1,361.99, while the technology-laden Nasdaq Composite dropped 11.23 points to 2,350.17.
A downgrade of technology bellwether Cisco Systems Inc. also weighed on investor sentiment, with UBS expressing concern over the networking giant's orders growth in switching its recommendation to neutral from buy.
Shares of Cisco fell 3.5% in early trading.
Ahead of the open, the Labor Department reported first-time applications for state unemployment benefits climbed last week, hitting levels last seen in mid-September 2005. .
Other economic data are slated for release at 10 a.m. Eastern, with the Institute for Supply Management's release of its March reading of the services sector.
Shares of Ebay Inc. edged higher after the online auctioneer drew an upgrade to buy from neutral from Merrill Lynch.
The airline sector was likely to come under early fire, with ATA Airlines closing operations and filing for bankruptcy protection.
By Kate Gibson