Before the Senate banking committee, Greenspan said "equity prices are high enough to raise questions of whether shares are overvalued," in the first part of his semi-annual testimony on the state of the economy.
The Dow Jones Industrial Average, which at first rose as much as 58.65 points after Greenspan's address, closed down 8.26 points to 9,544.42. The blue chip index had sunk as much as 79.44 earlier in the trading day.
Today's decline follows the third-biggest point gain of the year when the Dow rose yesterday 212.73 points, or 2.28 percent, to 9,552.68.
The Nasdaq Composite Index soared 1.47 percent or 34.36 points, to 2,376.37.
Greenspan also said that the Fed would continue to evaluate whether its interest rate cuts implemented to help the financial markets during last fall's global economic turmoil "remain appropriate as those disturbances abate."
Internet stocks, despite the chairman's cautionary words, continued their upward swing.
Eight of the ten most actively traded issues on the Nasdaq market today posted strong gains.
Dell Computer, which took a beating last week on growth concerns, rose 2.58 percent and was the most heavily traded issue with 28.5 million shares changing hands today.
On the big board, six of the top seven movers were technology stocks. Of those, four closed higher.