Stocks recovered from their worst levels but still finished lower Wednesday in choppy trading, after minutes of the Federal Reserve's latest meeting offered no strong hints about more easing to prop up the sluggish economy.
The Dow Jones Industrial Average slid 48.59 points, or 0.38 percent, to close at 12,604.53, logging its fifth-straight down day, dragged by United Tech and Boeing. The blue-chip index was down more than 100 points at its session low.
The S&P 500 erased 0.02 points, or 0.001 percent, to end at 1,341.45. The Nasdaq fell 14.35 points, or 0.49 percent, to finish at 2,,887.98. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded below 18.
Among the key S&P sectors, energy ended higher, while industrials slipped.
"It's obvious the Fed is deeply concerned with what is happening and they also know they need to dance a fine line," said Todd Schoenberger, managing principal The BlackBay Group. "The risk is greater by not doing anything."
Stocks dropped to their session lows shortly after the Fed said it is open to the possibility of buying more bonds to stimulate the economy, but added that conditions might need to worsenfor a consensus to build, according to the minutes of the its latest meeting in June. The market eventually recovered most of their losses in the final half-hour of trading.
In June, the central bank decided to expand its latest effort to keep long-term rates low, announcing that it would buy an additional $267 billion in long-term bonds with proceeds from short-term notes.
"[The Fed has] another two-day meeting in September and they will announce something then, but not implement until Jan 2013," he continue. "This alleviates the perception that they are moving on behalf of Obama, because we won't see the results until late first-quarter 2013."
The search for Yahoo's new CEO continued as the Internet company's board members met to discuss who should take the helm at the Internet company. Yahoo meets with shareholders on Thursday. So far, Interim CEO Ross Levinsohn is said to be the leading candidate for the permanent job.
American Airlines parent AMR is moving ahead with assessing potential merger partnersand plans to reach out to interested parties including U.S. Airways , JetBlue, AlaskaAir, RepublicAirways’ Frontier unit, and VirginAmerica.
In corporate news Goldcorp cut its full-year guidance for production levels, citing reduced output at mines in Ontario and in Mexico. The company joins a long list of others that have lowered their guidance in the last week.
After the closing bell, oil giant Chevron is scheduled to post its second-quarter interim update and hotel chain Marriott is slated to post its earnings.
Hhgregg plunged after the consumer-electronics retailer forecast a wider-than-expected loss and cut its full-year outlook. In addition, at least six brokerages slashed their price target on the company. Larger rival Best Buy also slumped following the report.
Groupon tumbled to hit an all-time lowof below $8 a share since going public last November amid ongoing concerns over the daily-deal site's financial health.
Abercrombie & Fitch was the biggest gainer on the S&P 500 index amid news that the retailer may be planning a bit share buyback and is also likely to trim its European expansion plans, according to reports.
On the economic front, U.S. trade deficit narrowed 3.8 percentto $48.7 billion in May, according to the Commerce Department, in line with expectation. And wholesale inventories for May gained 0.3 percent in May, according to the Commerce Department, also in line with expectations.
Weekly mortgage applications slipped last week due to a drop in refinancing activity, according to the Mortgage Bankers Association.
Treasury prices ralliedafter the government auctioned $21 billion in 10-year notes at a high yield of 1.459 percent and bid-to-cover of 3.61.
“The extraordinarily bearish sentiment is an opportunity to get into the market at low prices,” said Doug Cote chief market strategist at ING Investment Management. “Things are much better than the market is pricing in and I think there’s going to be two catalysts for markets to go up—realization that global risk is overstated and fundamentals are far better than what the market’s pricing in.”
European shares ended mixedafter the IMF warned that Italy must break its debt spiral and reaffirmed its forecast that the Italian economy would shrink by 1.9 percent this year.
The euro dropped to $1.223 against the U.S. greenback, trading at its lowest level in almost two years.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: Jobless claims, import & export prices, Fed Pres Williams speaks, 30-yr bond auction, Treasury budget, Facebook hearing; Earnings from Fastenal
FRIDAY: PPI, consumer sentiment, Fed pres Lockhart speaks, Dell shareholders mtg; Earnings from JPMorgan, Wells Fargo
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