Stocks snapped a three-day winning streak on Wednesday after a report showed housing starts fell sharply in October and weak outlooks from two software firms.
The Dow Jones Industrial Average and S&P 500 lost 0.1 percent. The tech-heavy Nasdaq tumbled 0.5 percent.
Techs, which have been an investor favorite as of late, took a hit after engineering-software maker Autodesk delivered a weaker-than-expected outlook and customer-relations software maker Salesforce.com reported a slowdown in new business. The stocks dropped 10 percent and 3 percent, respectively.
Housing starts unexpectedly fell 10.6 percentto their lowest level in six months, weighed down by a sharp decline in construction activity for both single-family and multi-family dwellings.
At the same time, the consumer price index rose 0.3 percent, indicating that inflation may not be quite as benign as some economists have indicated.
HP wasthe biggest drag on the Dow, down 1.6 percent, while Bank of America was the biggest gainer.
Bank of America rose 3.7 percent after billionaire hedge-fund manager John Paulson said he expects the stock to double in the next few years.
Techs finished mostly lower but AMD , which announced a private debt offering of $500 million, and Analog Devices , which was put on Goldman Sachs' "conviction buy" list, advanced.
In other analyst action, Collins Stewart reiterated its "buy" rating on Microsoft .
Dell rose 0.7 percent ahead of the computer maker's quarterly results, due out Thursday.
An interesting twist in the Cadbury saga: Hershey is reportedly considering a joint bid with Italy's Ferrero, famous for its Nutella spread and Ferrero Rocher choclates, for the British chocolatier. Up until now, Kraft Foods was the only bidder but Cadbury wasn't happy with the offer.
In other M&A news, American Expressagreed to buyInternet-payment company Revolution Money for $300 million.
Colgate shares jumped over 3 percent amid buzz that UK consumer-products compan Reckitt Benckiser, which owns the Lysol brand, may be considering a bid for Colgate. In addition to its namesake toothpaste, Colgate owns brands including Softsoap and Palmolive.
And Delta Air Lines, along with its alliance partners, is offering $1 billion to Japan Airlines to sway the money losing carrier from its affiliation with American Airlines .
Retail earnings have been in focus this week as the holiday shopping season approaches.
BJ's Wholesale shares fell nearly 2 percent after the warehouse-club operator reported its quarterly profit dropped 37 percent and said pricing has been "extremely aggressive" heading into the holiday season.
Limited Brands will have its quarterly numbers after the closing bell.
JCPenney announced plans to stop publishing its twice-yearly "big book" catalog as more consumers are doing their shopping online.
Toyota posted its first year-over-year global sales increase in October in 15 months, with sales rising 5 percent.
Gold settled at $1,141.20 a troy ounce, after setting a new high above $1,151, as the CPI report stirred inflation worries.
Oil settled above $79 a barrel, after earlier surpassing $80, after a report showed crude supplies fell by 900,000 barrels last week — three times of what was expected.
Volume was light, with about 1.06 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 8 to 7.
Still to Come:
WEDNESDAY: Earnings from Limited after the bell
THURSDAY: EU chooses new president; Fed's Plosser, Fisher speak; Ghosn, Rattner speak; weekly jobless claims; leading indicators; Philly Fed; Geithner speaks; Earnings from Sears, Dell, Gap
FRIDAY: Fed's Plosser speaks; state-by-state jobs report
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