Stocks paused after a strong rally on Tuesday to end mixed on relatively low volume as investors took a breather ahead of the jobs report on Friday.
The Dow Jones Industrial Average rose 22.93 points, or 0.2 percent, to close at 10,967.65, after moving between positive and negative territory for most of the day. Wednesday's meek performance comes a day after all the major indexes rallied, putting the Dow is within striking distance of 11,000 for the first time since May.
General Electric and Alcoa rose, while Bank of America and AT&T fell.
The S&P 500 fell 0.78 points, or 0.1 percent, to close at 1,159.97, while the Nasdaq fell 19.17 points, or 0.8 percent, to close at 2,380.66. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 21.
Among key S&P 500 sectors, energy, industrials and materials rose, while telecom and techs fell.
"Stocks seem to be taking the (employment) data more or less in stride," said Craig Peckham, equity product strategist at Jefferies. "The marketplace is increasing its bet on additional monetary policy easing, particularly quantitative easing (by the Federal Reserve)."
What is doing best are "hard asset plays," like gold and materials stocks, including Freeport-McMoRan and U.S. Steel.
Gold, meanwhile, continued its record run, rising as high as nearly $1,350 an ounce, before slipping back slightly, while copper prices hit a two-year high, boosted in part by a weaker dollar.
"In a world where there is a concern about the pace and slope of economic recovery, that could trigger more central bank policy easing, it's logical for investors to be deploying capital to assets that are more inflation protected," Peckham said.
Investors may just be taking a breather following the sharp rise in the previous session and ahead of economic reports later this week, particularly the September non-farm payrolls release on Friday, said Dan Cook, senior market analyst at IG Markets.
While the prospects of Fed action are priced into the market to some extent, Cook said a jobs number that is worse than expected would likely cause the market to rally further after an initial drop on the news.
In technology news, shares of Verizon rose after a report that Apple plans to mass produce an iPhone at the end of this year that would use CDMA technology, according to the Wall Street Journal. That would enable Verizon to sell the smartphone, ending AT&T's exclusive relationship with the popular phone. AT&T's shares sank after the news. Qualcomm is providing a key chip for the phone, the Journal said. A Verizon official said the company had "no comment" on the report.
Shares of Equinix plunged more than 30 percent after the telecommunications company said it cut its revenue targets for the third quarter and the full year due to heavy discounting and lower revenues from its Switch and Data business. Several brokerages cut their price target for Equinix.
Citrix Systems, a computer software firm, also slumped to the bottom of the Nasdaq Composite.
Semiconductor stocks were hit as well, after Morgan Stanley cut Altera and Xilinx to "underweight" from "equalweight," due to slowing orders out of Asia. Both companies are involved in the wireless infrastructure markets. Chip companies in other businesses were also weak, including Nvidia and Fairchild Semiconductor .
And Texas Instruments was mostly flat even after Credit Suisse raises its price target to $35 from $32.
Several other tech stocks posted big losses, including Salesforce , Akamai Technologies , Red Hat and NetApp .
Motorola announced that Verizon would sell the Droid Pro, a business-oriented phone with corporate-level security features that's based on the Google's Android operating system.
On the earnings front, Costco rose after the retailer posted higher quarterly profitas consumers began spending more on discretionary items such as apparel.
Monsanto fell after the fertilizer producer posted a wider-than-expected loss and warnings that 2011 is likely to be weak as well. Constellation Brands rose after the beverage manufacturer reported higher-than-expected quarterly profit, citing improving trends in its U.S. wine business, and affirmed its full-year forecast.
Yum Brands advanced after the fast-food restaurant owner reported a 7 percent rise in net income, despite rising commodity and labor costs.
Still to come, Marriott is expected to report earnings after the bell tonight. PepsiCo and Alcoa are scheduled to post results on Thursday.
General Electric was largely flat after the multinational conglomerate firm said a$1.2 billion takeover approach it made to Wellstreamhad been rebuffed by the British oil services company.
M&T Bank fell sharply after Allied Bank said it will hold a public offering its 22.4 percent stake in M&T. In addition, UBS cut its price target on M&T to $82 from $89.
UBS revised price targets for several regional banks mostly higher, but issued a "cautious outlook" on the sector, saying consensus forecasts overestimated the extent to which the banks would improve. The brokerage raised price targets for Citi National , Comerica , Huntington Bank , SunTrust Banks and U.S. Bancorp , while cutting its target for BB&T .
Meanwhile, Chevron CEO John Watson said he expects the U.S. deepwater drilling moratorium put in place after BP's disastrous Gulf of Mexico accident to be lifted "soon." Chevron shares rose slightly.
Oil prices reached a fresh five-month high near $84 a barrelafter government figures showed a large fall in product inventories.
Pfizer is considering options for its Capsugelbusiness, which makes hard capsules for drugs, that include a possible sale. Capsugel had revenue of $740 million last year.
In M&A news, Johnson & Johnson announced it ispurchasing Crucellfor about $2.41 billion, a move that had been expected. The acquisition will add to the health care company's vaccine business.
Family Dollar shares were up slightly after the discount retailer announced an accelerated $250 million buyback program with Wells Fargo.
Less than 4 billion shares changed hands on the consolidated New York Stock Exchange.
In the day's economic news, ADP employment report on private-sector employment for September showed a 39,000 drop in payrolls, well below expectations for a 20,000 increase.
In addition, Challenger, Gray & Christmas said planned layoffs increased 7 percent in September, a slow pace but one that also provided little indication that the jobs picture was improving.
Meanwhile, U.S. mortgage applications for home purchases rosefor a second straight week, although applications for refinancing loans fell for a fifth straight week, the Mortgage Bankers Association reported. Taking both into account, the seasonally adjusted index of mortgage applications fell 0.2 percent for the week ended Oct. 1
The European Central Bank decides on rates on Thursday, but investors are more focused on currencies ahead of an IMF/World Bank meeting later this week.
Also, Fitch Ratings said it was cutting the credit rating for the Irish government to A+ and warned of future cuts unless the nation embraces austerity measures.
On Tap This Week:
THURSDAY: Monthly chain store sales; BoE announcement; ECB announcement; Kansas City Fed Pres Hoenig speaks; Consumer credit; Mosaic shareholder meeting; Earnings from PepsiCo and Alcoa
FRIDAY: Monthly non-farm payroll; Wholesale trade; NY Comic Con; IMF, World Bank annual meetings
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