Ben Bernanke reiterated this stance in Wednesday's appearance in front of the House Financial Committee, but on Thursday he acknowledged that the Fed is not prepared to act at this point in time. It seems only natural that the Fed would be discussing such matters given the recent deterioration in economic data, but the mere discussion of the potential doesn't necessarily increase the odds of further accommodation (weakening employment data amid a disinflationary environment would). The market retraced the initial gains made in reaction to the FOMC minutes and day one of the Bernanke speech. 

Then toward the end of the week, focus shifted to ratings agency warnings about the U.S. credit rating. Both Moody's and Standard & Poor’s said the U.S. was at risk for a downgrade if it isn't able to agree on a debt ceiling increase in time. There was a negative response in the market to each of these actions, but the markets quickly recouped their losses, as the warnings didn't really bring about anything that wasn't already known. 

On Friday the market digested the second round of European bank ‘stress tests.' The tests showed 82 of 90 banks passed with a total of 20 banks seeing their Core Tier 1 Requirements below the 5% threshold over the two-year time horizon. The count shows five Spanish banks, two Greek banks, and one Austrian bank failing the test. While the test did show some failures, many are already discounting the tests as using unrealistically favorable loss assumptions.

After Monday's large drop, the broader market had a hard time maintaining traction in either direction, but the overarching drift has been to the downside, despite positive earnings reports from Google (GOOG), JP Morgan (JPM) and Citigroup (C).