Stocks Recover From Lows to End Mixed, S&P Slightly Below Closing High

Stocks erased most of their early declines to close narrowly mixed Wednesday, with the S&P 500 finishing slightly below its closing high, but ongoing economic and political concerns over Europe kept a lid on gains.

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S&P 500

The Dow Jones Industrial Average slid 33.49 points to end at 14,526.16. At its intraday low, the Dow was down as much as 120 points. JPMorgan and Coca-Cola led the blue-chip laggards, while UnitedHealth ended higher.

The S&P 500 erased 0.92 points to close at 1,562.85, slightly below its all-time closing high of 1,565.15. The S&P has zigzagged between gains and losses for the last seven sessions. The Nasdaq eked out a gain of 4.04 points finish at 3,256.52.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, closed slightly above 13.

(Read More: Bulls Revved Up to Take Out Next Stocks Milestone)

Among key S&P sectors, telecoms finished lower, while health care rose.

In Europe, political deadlock continued in Italy as the country's main leadership candidate Pier Luigi's Bersani reportedly said that only an "insane person" would want to govern the nation now, adding that Italy is "in a mess and faces a difficult year ahead."

Bersani made the remark after the anti-establishment "Five Star Movement" party headed by comedian Beppe Grillo again refused to form a coalition government with Bersani, thwarting his latest attempts to form a governing alliance.

(Read More: Hey Euro Zone, You Overrate Yourself: Moody's)

A political stalemate since its inconclusive elections in late February has spiked concerns over how the country will handle its growing debt problems. Italy paid more to borrow over five years than it has since October at its latest auction, indicating worries over its financial situation.

The euro extended its losses below $1.28 against the U.S. greenback, its lowest level since late November.

Elsewhere in Europe, Cyprus finalized financial control measures to prevent a run on its banks, which have been shut for a week since the country agreed to a conditional 10 billion euro ($12.8 billion) bailout from international lenders. Cypriots have been lining up to withdraw cash from ATMs, with limits at 100 euros a day for some banks.

"Cyprus is a reason to remind investors that Europe is a source of risk, but I'm not sure Cyprus itself is going to be enough [for a market pullback from the recent run-up]," said Thomas Lee, chief U.S. equity strategist at JPMorgan. "The big picture still points to a major secular bull market being underway, with at least another four years left, led by durable goods."

Trading was thin ahead of the three-day Easter weekend. U.S. markets will be closed Friday for Good Friday.

Comcast edged higher after the Supreme Court ruled in favor of the cable company in an antitrust case over how much the company charged subscribers. (Comcast is the parent company of NBCUniversal.)

Wal-Mart said that probes into alleged foreign bribery at its stores are likely to result in a financial loss. Separately, the retailer said it would start using stores to get Internet orders to shoppers faster, amid growing competition from online rivals such as

Boeing edged lower as its 787 Dreamliners face a temporary ban on some of the transocean flights, which would be a costly new challenge for the company.

Cliffs Natural Resources plunged to lead the S&P 500 laggards after Morgan Stanley downgraded the iron ore and metallurgical coal producer to "underweight" from "equal-weight." Rivals Alpha Natural Resources and Peabody Energy also traded lower.

Mattress Firm soared nearly 12 percent after the mattress maker provided solid guidance for fiscal 2013. In addition, Raymond James upgraded the company to "outperform" from "market perform." Other mattress companies bounced higher, including Tempur-Pedic and Select Comfort.

Weekly mortgage applications rebounded last week as interest rates pulled back for the first time in three weeks, according to the Mortgage Bankers Association.

Paychex and Red Hat are among notable companies scheduled to report earnings after the closing bell.

On the economic front, pending home sales slid in February, according to the National Association of Realtors.

(Read More: Housing Headwinds Still Exist: Shiller)

Earlier, Boston Fed President Eric Rosengren supported the central bank's asset purchase program, saying it is having the desired impact of speeding up the pace of the recovery and should be continued through the end of the year. Meanwhile, Cleveland Fed President Sandra Pianalto said the Federal Reserve should consider tapering off the pace of its bond-buying stimulus plan if the U.S. economy continues to show signs of improvement.

And Minneapolis Fed President Narayana Kocherlakota said the Fed should ease monetary policy further to bring the unemployment rate down at a faster rate. Kocherlakota expects the jobless rate to be close to 7 percent by the end of 2014, and forecasts growth around 2.5 percent this year and 3 percent next year.

Treasury prices held their gains after the government auctioned $35 billion in 5-year notes at a high yield of 0.760 percent. The bid-to-cover ratio, an indicator of demand, was 2.73.

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—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

THURSDAY: GDP, jobless claims, corporate profits, Chicago PMI, natural gas inventories, 7-yr note auction, Fed balance sheet/money supply, Ebay analysts mtg, weekly rail numbers; Earnings from Accenture, Blackberry, Mosaic, Gamestop
FRIDAY: Good Friday—U.S. banks open/equity markets closed, personal income & outlays, consumer sentiment

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