Stocks fell slightly on Wednesday as oil prices gained amid continuing unrest in the Middle East and North Africa.
The Dow Jones Industrial Average fell less than 10 points after gaining 178 points on Monday. The blue-chip index had risen 3.6 percent over the previous three sessions, after falling 4.3 percent from its Feb. 18, 2011 high.
Among Dow components, Alcoa and Intel fell, while Merck and Boeing gained.
The S&P 500 and the Nasdaq both declined. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell slightly to nearly 20.
Among the S&P 500's key sectors, health care and telecom gained, while industrials and materials fell.
Investors appeared to be taking a breather Tuesday after three consecutive sessions of strong gains reversed a good portion of the losses sustained in the wake of the multiple disasters in Japan.
"I would say the impressive part of that is we handled a lot of very negative news, very unexpected, uncertain news, and saw a relatively minor pullback as a consequence," said Marc Pado, U.S. market strategist and technical analyst at Cantor Fitzgerald.
One reason the market didn't continue to plunge is earnings season is just around the corner, and stocks tend to get a lift before earnings are released, Pado said.
"I think as the market moves to digest all the negative news, what’s new is that there’s positive news around the corner that people have been anticipating," he said.
Pado also pointed to strength in companies such as Caterpillar or Boeing , which are benefiting from capital equipment expenditures triggered by the tax depreciation allowance. His expectation is the market could stall this week, with the S&P 500 trading around 1,300, but that the bull market run will be recharged, and the broad market index could reach 1,385 in the next couple of months.
Oil prices moved higher amid unrest in Yemen and after a third night of air strikes on the Libyan capitalTripoli.
London Brent crude rose above $115 a barrel, while U.S. light sweet crude rose above $104 a barrel.
“Oil isn’t going down anytime soon," Rachel Ziemba, senior research analyst for Roubini Global Economics (RGE), told CNBC. “The question is, when it spikes to 150 (dollars), do people expect it to stay there? What if it averages 115-120 (dollars) a barrel?.”
RGE predicts that at that point the global economy would be spending almost 6 percent of GDP on oil. “In the past that has always preceded recession. We’re already starting to see a slowing global growth,” she said.
In Japan, smoke and steam rose from two of the reactors at Japan's quake-crippled nuclear plant, suggesting the battle to avert a disastrous meltdown and stop the spread of radiation was far from won. Another 6.3 magnitude earthquake shook Miyagi and Fukushima prefectures in northeast Japan Tuesday morning.
The president of the Tokyo stock exchange told CNBC said the bourse was not considering shortening trading hours to deal with the electricity shortage Japan faces following the devastating earthquake. Shares in Japan rose 4 percent on Tuesday.
The Bank of New York Mellon traded flat after news Tuesday that it would raise its dividend to 13 cents a share from 9 cents. The bank also said it would buy back up to $1.3 billion in stock this year.
Last week, the Fed told banks the results of stress tests on their capital positions, and indicated whether they could go ahead with dividend increases and stock buybacks, among other decisions affecting capital ratios.
Banks traded mixed on Wednesday, as most had traded higher in anticipation of dividend increases. JPMorgan and Wells Fargo traded flat to lower.
In company news, the CTIA wireless conference kicked off in Orlando Tuesday. , which fell 14 percent on Monday after AT&T's acquisition of T-Mobile, will be a key topic. Many investors had expected the logical partner for T-Mobile to be Sprint. Meanwhile, Raymond James upgraded Sprint to "strong buy" from "outperform," saying the drop in the stock as a result of AT&T/T-Mobile merger announcement was "overdone."
The CEO of Verizon Wireless , meanwhile, said he had no interest in buying Sprint.
Research in Motion's tablet, the Blackberry Playbook, will go on sale April 19 for $499, the company said Tuesday.
Meanwhile, Apple sued Amazon.com over the online retailer's use of "App Store", saying Amazon.com improperly used the trademark to attract software developers.
Netflix gained after Credit Suisse raised the movie rental firm to "outperform" from "neutral."
And shares of Tivo rose after news Citadel Advisors, a hedge fund, has accumulated a 5.3 percent stake in the company, according to a 13G filing.
Sony said it would have to cut or stop production at five more plants in Japan because of supply chain disruptions.
Walgreen fell despite reporting sales above expectations, while Dollar General rose after reporting a doubling in its fiscal fourth-quarter earnings.
Shares of Tiffany traded flat after the luxury jeweler cut its first quarter outlook because it had to close stores in Japan after the earthquake and tsunami, even as the company reported a 29 percent jump in fourth quarter income on strong demand both domestically and overseas.
And Bristol-Myers Squibb rose more than 5 percent in after-market trading after receving good news from a trial for its melanoma drug ipilimumab.
On the economic front, the Federal Housing Finance Authority said home prices fell 0.3 percent in January from December, and the Richmond Fed Index came in at 20 for March, down from 25 in February.
On Tap This Week:
TUESDAY: CTIA Wireless Convention; after-the-bell earnings from Adobe.
WEDNESDAY: Caterpillar analyst meeting; annual meetings for Disney, HP and Starbucks; mortgage applications, new home sales, oil inventories; before-the-bell earnings from General Mills.
THURSDAY: EU summit; durable goods, jobless claims, natural gas inventories, 10-year TIPS auction, money supply; before-the-bell earnings from Best Buy and ConAgra; after-the-bell earnings from Oracle, Research in Motion.
FRIDAY: USDA food prices outlook; GDP revision, corporate profits, and consumer sentiment.
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