Stocks struggled Wednesday as investors took a breather after a two-day rally and braced for the start of earnings season.
Techs started to push higher after an analyst upgrade on Cisco. Banks also gained after a couple of upgrades on the sector recently as analysts say stocks valuations are too low for earnings potential.
This comes after a two-day rally, in which stocks gained 2.6 percent, as recent data points have revitalized optimism about the recovery.
But that could all change as earnings season unofficially kicks off today, with the first Dow component, Alcoa, reporting after the bell.
Analysts say companies are going to have to bring it this quarter: They're looking for revenue growth, not just an improved bottom line due to cost-cutting measures. Plus, they'll also be looking at companies' outlooks for signs of the recovery.
The current expectations are for a 25-percent drop in the blended earnings of S&P 500 companies.
- Poll: Will the Dow Go to 9,000 or 10,000 Next?
- Click Here for CNBC.com's Earnings Central
Costco and Family Dollar beat expectations this morning, an encouraging sign for the retail sector ahead of chain-store sales, due out tomorrow.
Analysts say a few retailers could beat tomorrow, helped by a cool September.
And Citigroup is said to be exploring a possible sale of its Phibro commodities unit.
Cisco led the Dow — and the Nasdaq — after a William Blair analyst upgraded his rating on the stock to "outperform" from "market perform." The analyst said Cisco is winning new dealsand generally benefiting from the recovery amid pent-up demand.
Microsoft CEO Steve Ballmer said he doesn't expect the launch of Windows 7 to boost PC sales.
Amazon.com rallied after the online marketplace lowered the price of its Kindle e-reader, while expanding its marketing overseas.
Rumor has it that News Corp. chief Rupert Murdoch is in Asia right now, scouting out potential partners for his own e-reader.
Avis Budget Group warned that a recent warrant transaction against the car rental company could impact earnings. Avis on Tuesday offered $250 million in notes along with a warrant transaction.
In economic news, mortgage applications rose to their highest level since mid-May as interest rates continued to drop.
Following better-than-average demand for 3-year notes in an auction yesterday, the Treasury is back at it again today with a sale of $20 billion in 10-year notes. As usual, the results will be available shortly after 1 pm.
At 10 am, General Motors chief executive Fritz Henderson will be presenting a business update for the automaker, highlighting the progress it's made since its emergence from bankruptcy.
The Washington Post is reporting a probe of Hospital Corp. of America for possible securities law violations.
And Burger King Holdings announced an extensive revamp of its 12,000 worldwide locations.
Kansas City Federal Reserve President Thomas Hoenig is also in the news, saying late Tuesday that it's too soon to withdraw the Fed's massive support even though the U.S. economy is clearly rebounding.