By Anora Mahmudova and Sara Sjolin, MarketWatch

U.S. stocks declined after Federal Reserve Chairwoman Janet Yellen spooked investors by warning of potential pitfalls for investors, referring to stock values as "quite high."

But late-afternoon buying limited losses, and the main benchmarks closed only modestly lower.

The Dow Jones Industrial Average(DJI), which briefly turned negative after dropping more than 170 points at session lows, closed 86.22 points, or 0.5%, lower at 17,841.98. The Nasdaq Composite(RIXF) lost 19.68 points, or 0.4%, to 4,919.64.

The S&P 500(SPX) closed 9.30 points, or 0.5%, lower at 2,080.16, with eight of its 10 main sectors trading lower, but was still positive for the year, up 0.5% year-to-date. Telecoms, utilities and technology stocks led the losses.

Traders had already been fretting after a lower-than-forecast ADP employment report raised nervousness among investors ahead of the more closely followed nonfarm payrolls report slated for Friday.

Yellen's comments came at a panel discussion Wednesday (http://www.marketwatch.com/story/yellen-sees-dangers-in-quite-high-stock-valuations-2015-05-06) with the head of the International Monetary Fund, Christine Lagarde and didn't help lift investors' spirits.

Uri Landesman, president at Platinum Partners, said he agreed with Janet Yellen's assertion: "Stocks prices have been propped up because of lack of alternatives and that is not a good reason to buy stocks ...," he noted.

"While the long-term momentum is still positive, people are beginning to get nervous. A correction at this point would be welcome," Landesman said.

The stock market has not seen a 10% correction since 2011.

Data: In economic news, the U.S. created 169,000 private-sector jobs in April, payrolls processor ADP said, after a downwardly revised 175,000 jobs were created in March, well below the consensus estimate. A slowing pace of job gains may prompt the Federal Reserve officials to delay raising interest rates after the June meeting.

U.S. productivity in the first quarter fell by a 1.9% annual pace, resulting in the first back-to-back drop since 2006. The decline in productivity stemmed from companies hiring more workers and employees working longer hours even as production of goods and services declined.

Earnings:Wendy's Co.(WEN) shares jumped 7.2% after the fast-food chain released first-quarter adjusted earnings per share that slightly beat consensus, even as revenue missed forecasts.

SodaStream International Ltd.'s(SODA) first-quarter earnings met FactSet consensus estimates, but revenue fell short of forecasts. Shares fell 6.7%.

Shares of Herbalife Ltd.(HLF) climbed 16% after the nutrition-supplement maker late Tuesday raised its outlook for the year (http://www.marketwatch.com/story/herbalife-raises-guidance-as-earnings-grow-48-2015-05-05-174852122) as earnings rose a stronger-than-expected 4.8% in the first quarter.

For more on today's notable movers read Movers & Shakers column (http://www.marketwatch.com/story/sodastream-tesla-keurig-green-mountain-earnings-in-focus-2015-05-06).

Other markets:Asian markets (http://www.marketwatch.com/storyno-meta-for-guid) closed lower, while European stocks (http://www.marketwatch.com/storyno-meta-for-guid) were mixed.

Crude oil (http://www.marketwatch.com/story/crude-rallies-again-with-price-of-wti-atop-61-2015-05-06)(CLM5) moved briefly above $62 a barrel, but settled 0.9% higher at $60.93. (http://www.marketwatch.com/storyno-meta-for-guid)Gold prices (http://www.marketwatch.com/story/gold-gains-erasing-losses-after-adp-report-disappoints-2015-05-06)settled 0.2% lower at $1,190.30. The dollar (DXY) was pushing lower against other major currencies, particularly the euro which broke $1.13 against the buck.

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