Stocks closed slightly lower after struggling in a narrow range amid light trading Wednesday as oil prices ended mixed on the second anniversary since the S&P 500 hit its low point of the financial crisis.
The Dow Jones Industrial Average fell 1.29 points, or 0.01 percent, to close at 12,213.09 after bobbing in and out of positive territory throughout Wednesday's session. The blue-chip index finished sharply higherin the previous session.
Among Dow components, Caterpillar and Chevronsank, while IBM and Home Depot gained.
The S&P 500 fell 1.80 points, or 0.14 percent, to close at 1,320.02, while the tech-heavy Nasdaq fell 14.05 points, or 0.5 percent, to close at 2,751.72. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 20.
Among key S&P 500 sectors, materials and energy fell, while utilities and telecom rose.
"It's kind of an uneventful day," said Bernard McSherry, senior vice president at Cuttone. "The oil play is running out of steam. The feeling is that what is going on in Libya will be contained in Libya. I think some traders are taking solace in that."
The market is also getting some support from the European debt crisis, as money flows into the U.S. dollar and stocks, McSherry told CNBC.com.
Oil prices ended mixed on Wednesday, as U.S. light sweet crude fell slightly, below $105 a barrel, after the government said crude oil inventories rose more than expected by 2.5 million barrels. London Brent crude gained nearly 2 percent, to trade above $115 a barrel amid intensified fighting in Libya. Meanwhile, gold rose slightly to $1,429.30, falling from the previous day's record high.
Wednesday's trading may have been lackluster because the market has become so event driven, as there was no definitive event to set a direction.
"The market can’t make up its mind," J.J. Kinahan, chief derivatives strategist at TD Ameritrade told CNBC.com. "I think we’ll continue to bounce around in here for awhile until we have an definitive event."
While the market seemed to lack direction on Wednesday, the fact the VIX is trading in a new "comfort zone" of 19 or 20 instead of 15 or 16, where it had traded for months, is a sign of the market's unease, Randy Frederick, director of trading and derivatives at Charles Schwab, told CNBC.com.
"What (the VIX) is telling us now is there is a higher level of anxiety or uncertainty in the market now than there was," Frederick said. But, "that's not a bad thing for a market that's been going straight up for six months.
Meanwhile, Pimco's Total Return Fund, the world's biggest bond fund, dumped all its U.S. government-related securities, including Treasurys and agency debt, according to a source familiar with the fund's holdings.
"It just gives people that follow him the bias not to bullish on the Treasury market. He thinks rates are going higher," John Spinello, Treasury's strategist at Jefferies, told CNBC.com.
The S&P 500 has soared 95.4 percent since it bottomed at 676.53 on March 9, 2009 after hitting a peak of 1,565.15 on Oct. 9, 2007. The rally in the broad market index is its best in 55 years. Some stocks have done particularly well, including Genworth Financial , up 1329.7 percent, and JDS Uniphase , up 1,048.4 percent.
In stocks news, Molycorp traded lower ahead of releasing quarterly earnings after the market closes.
On the tech front, shares of Finisar plunged more than 30 percent after the fiber optic component maker posted a disappointing forecast, although its earnings more than tripled. Piper Jaffray cut its price target on the stock to $37 a share from $54, while Citigroup cut its target to $30 from $35.50.
That news hit other companies in the sector, including rival JDS Uniphase and Ciena.
Texas Instruments also slumped after the chipmaker narrowed its guidance and said that demand for chips for televisions remains weak, although UBS raised its price target on the firm to $36 a share from $32.
But IBM shares advanced after at least six brokerages raised their price targets on the tech giant.
Stocks were higher across the retailers. Children's Place soared despite a 5.8 percent decline in profits, as better margins and lower expenses kept losses in check.
Also in the retail space, American Eagle Outfitters jumped after the teen retailer forecast profits in line with analysts' estimates. The firm also announced the retirement of its CEO. And rival Aeropostale also climbed after the clothing retailer signed a deal to open about 25 stores across Asia over the next five years.
Bon-Ton Stores soared more than 10 percent after the department store chain posted a robust profit as a key revenue metric improved.
Fertilizer stocks took a hit after Citigroup said the sector was fully valued and it was time to take profits. Potash and Mosaic both fell after Citi lowered its ratings on the stocks to "hold" from "buy."
Honeywell slipped despite issuing an improved forecast for first-quarter sales and profit. The diversified manufacturer reaffirmed its outlook for 2011, and said it authorized a $3 billion stock buyback.
Shares of Dynegy skidded after news the power company may declare bankruptcy if it can't replace or amend a loan agreement.
Boston Beer tumbled more than 3 percent after the producer of Samuel Adams beer, posted lower-than-expected earnings results, hurt by advertising, promotional and selling expenses. (Watch: Boston Beer founder Jim Koch on CNBC)
Johnson Controls , meanwhile, gained after Barclays raised its rating on the diversified manufacturer to "overweight" from "equalweight," saying the company's building efficiency unit should benefit from rising prices.
In IPO news, HCA, the biggest U.S. for-profit hospital chain, is expected to price an initial public offering Wednesday at the top end of its $27-30 range, CNBC has learned.
Volume on the consolidated tape of the New York Stock Exchange was 3.6 billion shares, while 871 million shares changed hands on the NYSE floor.
Treasury prices gainedafter the government auctioned $21 billion in 10-year notes, which had a high yield of 3.499 percent and a bid-to-cover of 3.32. The government is expected to auction 30-year bonds on Thursday.
In U.S. economic news, the Mortgage Bankers Association's seasonally adjustedindex of mortgage application activity rose 15.5 percent in the week ended March 4, the highest level in three months. And U.S. wholesale inventories rose 1.1 percentin January to $436.88 billion, the highest level in 14 months, according to the Commerce Department. Economists surveyed by Reuters had expected a 0.9 percent increase.
Sovereign debt worries continued to weigh on the market in Europedays after Moody's cut its rating on Greece's debt by three notches, and ahead of a meeting of euro zone heads of state Friday. The FTSEurofirst 300 index of top European shares closed 0.3 percent lower.
The Saudi stock market got a lift from billionaire Prince Alwaleed bin Talalwho said he would invest invest 1 billion riyals ($267 million). The Saudi stock market has been battered by unrest in the Middle East.
On the Calendar:
WEDNESDAY: Earnings after-the-bell from H&R Block.
THURSDAY: BoE announcement, international trade, jobless claims, quarterly services survey, 30-year Treasury bond auction, Treasury budget, money supply, Nasdaq peak anniversary; Earnings before-the-bell from Smithfield Foods and after-the-bell from National Semiconductor.
FRIDAY: Retail sales, consumer sentiment, business inventories, S&P index rebalancing info due, Apple's iPad 2 ships; earnings before-the-bell from Ann Taylor.
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