Stocks dipped into negative territory in the final hour of trading after trading flat for most of the session Tuesday as investors took a breather following a strong market rally fueled by comments from Fed Chairman Ben Bernanke.
Still, stocks are on track to post their best quarter since 1998.
The Dow Jones Industrial Average dipped 43.90 points, or 0.33 percent, to end at 13,197.73, dragged by BofA. The blue-chip index is still on track to log its sixth-consecutive month of gains.
The S&P 500 erased 3.99 points, or 0.28 percent, to finish at 1,412.52. The Nasdaq slipped 2.22 points, or 0.07 percent, to close at 3,120.35.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 15.
Among the key S&P sectors, utilities edged higher, while financials declined.
Apple hit an all-time high after Thinkequity boosted its price target on the iPad maker to $700 from $600. (Read More: Apple's Gains Make Some Mutual Funds More Risky) Meanwhile, CEO Tim Cook will be talking to government officials in Chinato clear up a number of problems ranging from its iPad trademark to local labor.
“The smart money will begin unwinding starting from the second week of April as Alcoa kicks off the earning season," Todd Schoenberger, managing director of LandColt Trading.
Following a strong runup in stocks in the first quarter, Schoenberger said he expects to see a “healthy selling period” sometime in mid-April.
“The market is rallying on the expectation of further Fed accommodation—it’s not on earnings or macro data,” he explained. “Operation Twist comes to an end in the second quarter… the only entry point will be if the chairman promises and put in in writing that we’re going to have further easing.”
On Monday, Bernanke said the Fed may continue its easy monetary policy if the jobs market continues to show signs of weakness, fueling a rally that sent the S&P to its best level in almost four years.
Meanwhile, James Bullard, president of St Louis Federal Reserve Bank struck a less dovish tone than Bernanke, saying a third round of stimulus is unnecessary unless the domestic economy deteriorates further.
BofA tumbled after Baird cut its rating on the bank to "neutral," but raised its price target to $10 from $9.
Fellow Dow component Alcoa slipped even after Stifel lifted its price target on the aluminum producer to $13 from $11.
Meanwhile, Pfizer was the biggest gainer on the Dow after a Goldman Sachs note suggested the drugmaker may separate itself into multiple companies in a few years.
Amazon.com gained after the online retailer said the Harry Potter series are available through the Kindleafter the company struck a distribution deal with author J.K Rowling's new website and e-book store, Pottermore Shop.
Among earnings, Walgreen rose after the pharmacy chain posted earnings that fell less than expected as sales of general merchandise held up.
Lennar rallied to lead the S&P 500 gainers after the homebuilder posted its sharpest surge in orders in three quartersand added it was seeing robust signs of improvement in sales activity. This comes after rival KBHome posted an unexpected decline in orderslast week, hurt by rising cancellations in the first quarter.
On the economic front, single-family home prices were unchanged in January, according to the Case-Shiller home price index. On a non-seasonally adjusted basis, prices tumbled 0.8 percent.
Meanwhile, consumer confidence declined in Marchto 70.2, according to the Conference Board, from an upwardly revised 71.6 in the previous month.
Treasury prices held their gainsafter the government auctioned $35 billion in 2-year notes at high yield of 0.340 percent and bid-to-cover of 3.69.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
Coming Up This Week:
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Fed's Bullard speaks, FDA discusses obesity drugs
THURSDAY: GDP, jobless claims, corporate profits, Fed's Plosser speaks, 7-yr note auction, farm prices, Fed's Lacker speaks; Earnings from Best Buy, Research In Motion
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, Stringer's last day as Sony CEO
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