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It's "a bit of a pause and a bit of consolidation as we come through third-quarter earnings season and cast our gaze forward," said Bill Northey, chief investment officer at U.S. Bank Private Client Group.
"I believe (a December rate hike) is taken for granted at this point. It's going to be the new information that's going to drive market expectations going forward," he said, noting more sector-specific trading.
Energy closed down 1.9 percent as the greatest decliner in the S&P 500. Health care was the second-worst performer, while consumer discretionary ended half a percent lower as the third-greatest decliner.
Macy's closed 13.99 percent lower after briefly falling more than 15 percent, for its worst day since 2008. As of Wednesday's close, the stock is down more than 35 percent year-to-date.
The retailer cut full-year sales and profit forecasts, and posted a surprise drop in quarterly same-store sales as customers reduced spending and the strong dollar pressured revenue from tourists.
In contrast, J.C. Penney said it is "pleased" with its third-quarter results and said comparable same-store sales rose 6.4 percent, which topped FactSet expectations of 5.7 percent. JC Penney also announced the settlement of a false advertising class action lawsuit ahead of its earnings report, due Friday.
The stock closed down 1.8 percent, still up more than 30 percent for the year so far.
Ben Pace, chief investment officer at HPM Partners, said investors should look beyond retailer earnings as a gauge on the consumer since sales are often store-specific and are increasingly subject to online shopping trends.
"I think the U.S. consumer is the linchpin of the whole global growth story, not just in the U.S.," he said.
Shares of Amazon.com jumped 2.15 percent to close at a record. The stock also hit an all-time intraday high going back to the company's initial public offering in 1997. Morgan Stanley raised its price target to $800 a share, for a 21 percent upside from Tuesday's closing price.
The major averages attempted to hold opening gains in intraday trade before closing lower.
"I think the trend (in equities) is still positive. I think the momentum is still good. What we are seeing is a deterioration of the breadth of the market," said Bruce Bittles, chief investment strategist at R.W. Baird. He noted some concern over the continued declines in commodity prices.
Crude oil settled off session lows but still down $1.28, or 2.9 percent, at $42.93 a barrel after the American Petroleum Institute showed a greater-than-expected build in U.S. crude stocks. WTI crude hit its lowest level since Oct. 27 in intraday trade.
Brent fell more than 3 percent to hit its lowest level in intraday trade since Aug. 27.
The federal government's Energy Information Administration will release official inventory data Thursday due to Wednesday's Veterans Day.
"The outlook for oil is continuing to be low. We see it's benefiting many, many sectors of the economy, especially consumer discretionary. I would point out that today is the day of the consumer. Good jobs growth continues," said Doug Cote, chief market strategist at Voya Investment Management.
Cote and other analysts also eyed Singles' Day sales in China, the local version of Black Friday hosted primarily by Alibaba every Nov. 11. The e-commerce giant said final sales for the shopping event totaled $14.3 billion, topping expectations and last year's record of $9.3 billion.
Shares of Alibaba closed down 1.9 percent.
Chinese data out overnight showed firmness in the consumer, with retail sales up 11 percent year-over-year in October, up slightly from 10.9 percent in September. Industrial production edged lower in October and missed Reuters expectations.
Asian stocks mostly ended modestly higher, with only the Hang Seng closing lower.
European stocks closed higher despite lack of detail on potential for more quantitative easing, as investors had expected from a speech by European Central Bank President Mario Draghi.
The U.S. dollar gave back some of its recent gains, off about 0.3 percent against major world currencies. The euro held near $1.07.
The bond market is closed for the Veterans Day holiday.
Investors also awaited a slew of Federal Reserve speakers scheduled for Thursday, which include Fed Chair Janet Yellen's opening remarks at the U.S. central bank's conference.
Markets increasingly expect a rate hike in December after Yellen's remarks last week and a strong jobs report Friday.
"We started the week with a rethink and reset on monetary policy and that rethink has exhausted itself," said Art Hogan, chief market strategist at Wunderlich Securities.
"I think the market is clearly showing resilience here," he said. "When you look at the sharpness of the selloff we had I think we've found some equilibrium."
U.S. stocks ended narrowly mixed Tuesday, pressured by a more than 3 percent decline in Apple.
Apple closed down nearly 0.6 percent lower Wednesday, while the iShares Nasdaq Biotechnology ETF (IBB) fell1.5 percent.
PayPal's stock closed down 1.8 percent after reports that Apple is in talks with major banks to roll out a mobile person-to-person payments system.
The closed down 6.72 points, or 0.32 percent, at 2,075.00, with energy leading six sectors lower and utilities the greatest advancer.
The Nasdaq closed down 16.22 points, or 0.32 percent, at 5,067.02.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 16.
Decliners were a touch ahead of advancers on the New York Stock Exchange, with an exchange volume of 809 million and a composite volume of nearly 3.7 billion in the close.
Gold futures settled down $3.60 to $1,084.90 an ounce.
—Reuters contributed to this report.
On tap this week:
Earnings: SABMiller, Siemens, Advance Auto Parts, Burberry, Kohl's, Viacom, Energizer, Cisco Systems, Petrobras, Applied Materials, Nordstrom, Blue Buffalo, El Pollo Loco, Party City, Planet Fitness, Sunrun
8:30 a.m.: Jobless Claims
9:05 a.m.: St. Louis Fed President James Bullard
9:30 a.m.: Fed Chair Janet Yellen delivers welcoming remarks at the Federal Reserve's Conference
9:45 a.m.: Richmond Fed President Jeffrey Lacker
10 a.m.: JOLTS
10:15 a.m.: Chicago Fed President Charles Evans
11:45 a.m.: New York Fed President Bill Dudley
2 p.m.: Federal Budget
6 p.m.: Federal Reserve Vice Chairman Stanley Fischer
Earnings: Tyco, Berry Plastics, JC Penney, WGL Holdings
8:30 a.m.: Retail Sales; Retail Sales ex-autos; PPI; PPI ex-food & energy
10 a.m.: Consumer Sentiment; Business Inventories
12:30 p.m.: Cleveland Fed President Loretta Mester
*Planner subject to change.
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