Stocks ended mixed after a volatile session as investors cautiously anticipated monthly jobs data and third-quarter earnings reports.
The Dow Jones Industrial Average fell 19.07 points, or 0.2 percent, to 10,948.58. Alcoa , Verizon, and AT&T fell after failing to break above the 11,000 mark. GE and DuPont rose.
At the market open, the blue-chip index rose to as high as 10,998, almost hitting the psychologically important 11,000 level. The last time the Dow reached the benchmark was on May 4. The highest close for the blue-chip index this year was 11,205.03, reached on April 26.
The S&P 500 fell 1.91 points, or 0.2 percent, to 1,158.06, while the Nasdaq rose 3.01 points, or 0.1 percent, to 2,383.67. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 21.
Telecom, materials and consumer staples sectors fell, while consumer discretionary and technology rose.
One reason for the market's movements on Wednesday was the dollar, which recouped losses and gained ground against the euro as investors bet the rally against the dollar on concerns about U.S. monetary policy had been overdone. Meanwhile,gold stocks skidded on the dollar's rise, with CBOE Gold Indexfalling about 3 percent.
Also playing a part in the market's decline: Marc Sumerlin, managing director and co-founder of the Lindsey Group, and a former economic policy adviser to President George W. Bush, said it would take up to $7 trillion in asset purchases by the Federal Reserve to make a difference in the economy, according to Marc Pado, market strategist at Cantor Fitzgerald.
“To get someone who was part of the former economic council saying the Fed will need to step up big and do $6 trillion in (asset purchases), was a bit of a shock and created a bit of nervousness,” Pado said.
Any investors with real concerns about either the jobs report, or the upcoming earnings season, was probably on the sidelines, he added.
On the earnings front, PepsiCo shares fell after the beverage giant lowered the top end of its guidancefor the fiscal year because of changes in currency rates.
Marriott shares sank despite a boost in the hotel chain's revenues as analysts focused on the slow growth in the sector. Meanwhile, Goldman Sachs issued a report recommending Hyatt , Starwood and Marriott as a "buy," saying recovery in the lodging sector will continue.
Earnings season unofficially kicks off after the bell when Alcoa releases results. Analysts expect the aluminum maker to earn 5 cents a share on revenue of $4.96 billion, according to a consensus estimate from Thomson Reuters.
In the day's economic news, chain store sales beat their individual estimates, a positive sign that shows the consumer was buying despite waning confidence and higher savings rates. Retail sales rose 2.8 percent in September, thanks to strong back-to-school buying, beating estimates of a 2.1 percent gain, according to Thomson Reuters.
Limited Brands , Zumiez and Abercrombie & Fitch jumped after reporting positive results. American Eagle Outfitters climbed more than 7 percent after the teen retailer raised its fiscal third-quarter earnings and reported a surprising jump in September same-store sales.
However, some disappointing figures came from Target , BJ'sWholesale and Gap . Bebe Stores shares plunged after the retailer said its same-store sales fell almost 5 percent.
In the technology sector, Goldman recommended buying Akamai and VMware on weakness. Both companies are in the cloud computing industry, which dragged on Wednesday after rival Equinix said it had to lower prices.
Yahoo fell after the company announced upgrades to its search results, designed to improve the site's ease of use.
Nokia rose after news that wireless company LightSquared would build mobile devices for the company's fourth-generation network. Qualcommwill be supplying the chips.
Also, Hewlett-Packard was up slightly after the tech giant announced would introduce smartphones in 2011 using software acquired from its acquisition of Palm. In addition, the Wall Street Journal reported Apple will make a version of the iPhone that can be used by Verizon .
BMC Software soared more than 8 percent after rumors that the software company may be exploring a sale.
MEMC Electronic Materials got a boost after Wunderlich Securities raised the rating on the semiconductor equipment maker to "hold" from "sell." And Check Point Software rose after UBS initiated coverage of the information technology security company as a "buy."
While health care stocks were higher overall, shares of Immucor sank after the medical lab equipment maker revised its forecast for 2011 earnings lower.
Viacom shares were slightly lower despite a ratings upgrade to "buy" from Goldman Sachs, which also added the entertainment company to its "conviction buy" list and raised the firm's price target to $45 from $41.
In restaurant industry news, UBS raised its price target for Brinker to $20 a share from $17. Meanwhile, Ruby Tuesday tumbled nearly 6 percent after the firm affirmed a downbeat view for its full-year earnings. The stock had hit a nearly three-year high earlier this week.
Volume on the consolidated New York Stock Exchange was light, with 3.8 billion shares changing hands.
In other economic news, U.S. consumer credit outstanding fellby $3.34 billion after falling $4.09 billion in July as credit card debt continued to fall.
jobless claims fell by 11,000 to 445,000, the lowest level in three months, for the week ended Oct. 2, below the critical level of 450,000. That's better than a Briefing.com poll, which said first-time claims for jobless benefits would fall to 450,000 new claims, down from the revised 456,000.
Investors are awaiting Friday's jobs news with the release of nonfarm payrolls news by the U.S. Labor Department.
A report on consumer credit is released at 3 p.m. ET. A consensus by Briefing.com estimates consumer credit will drop by 3.0 in August.
On Tap This Week:
THURSDAY: Consumer credit; Alcoa Earnings
FRIDAY: September non-farm payrolls; Wholesale trade; NY Comic Con; IMF, World Bank annual meetings
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