Stocks failed to get a lift from stronger auto sales on Wednesday as traders awaited news about the size and scope of the Federal Reserve's anticipated plan to buy bonds to stimulate the economy.
The Dow Jones Industrial Average fell more than 20 points a day after closing at its highest level since April 26.
Alcoa and American Express declined, while Cisco and Hewlett-Packard advanced.
The S&P 500 Index and the Nasdaq both fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to nearly 22.
Among key S&P 500 sectors, materials, consumerdiscretionary and energystocks fell.
A Republican takeover of the House of Representatives, and a largely positive batch of economic data, did not create much enthusiasm in the market ahead of the Federal Reserve's statement on monetary policy, which the central bank is due to deliver when its two-day meeting ends at 2:15 p.m.
The Fed was expected to announce a plan to buy long-term Treasury securities in an effort to drive down long-term rates and stimulate the economy. The timing and amount of the purchases are unclear.
October auto sales were being reported by the major auto makers. GM core brand sales rose 7.1 percenton an adjusted basis in October, better than expected, while sales at Chrysler rose 37 percent. Also, a sales analyst at Ford said October auto sales are projected to hit a pace of 12 million vehicles, which would be a new monthly high for 2010.
In corporate news, Motorola fell after news Carl Icahn bought another 15.2 million shares of the wireless phone provider.
Also, third-quarter earnings reports continued to be released on Wednesday.
Shares of Time Warner fell after the entertainment company reported its revenue rose 2 percent, slightly less than expected.
CVS Caremark's shares also fell after the pharamcy retailer reported a drop in third-quarter earnings from sluggish sales in its pharmacy benefits division. CVS also cut its full year outlook.
Aetna , meanwhile, reported a surprising jump in third-quarter earnings, and raised its profit outlook for the full year, sending the health-insurer's shares higher.
Insurance reserve adjustments hurt earnings for Pulte Group . The homebuilder lost $995 million, or $2.63 per share, compared with a loss of $361.4 million, or $1.15 per share, a year ago. The company also took charges to write down land.
The world's biggest brewer Anheuser-Busch InBev reported core profit in the third quarter rose 9.1 percent on a like-for-like basis and forecast earnings would grow at an even faster pace in the fourth quarter.
The dollar was up slightly against a basket of currencies as traders awaited the Fed's decision. Fed purchases of long-term securities were expected to push the value of the dollar lower.
On the economic front, an index for the service sector rose more than expected, to 54.3, according to the Institute for Supply Management. The ISM non-manufacturing new orders index was 56.7 in October, up from 54.9 in September.
Also, U.S. factory orders rose 2.1 percentin September, more than expected, and the biggest gain in eight months, the Commerce Department reported. Factory orders had fallen 0.5 percent fall in August. In one sign of continued weakness, however, a measure of business confidence — orders for non-defense capital goods excluding aircraft — fell 0.2 percent after rising 5.1 percent in August.
In other economic news, private-sector jobs rose by 43,000 from September to October on a seasonally adjusted basis, compared to a revised loss of 2,000 jobs in September, according to the ADP National Employment Report. The September figures was first reported as a loss of 39,000.
Also on the jobs front, planned layoffs were slightly higher in October from a month earlier, but the pace of job cuts remained near a record low, according to outplacement company Challenger, Gray & Christmas.
The reports come two days before release by the government of October nonfarm payrolls, which economists forecast will show an increase of about 60,000 jobs.
Also, MasterCard Advisors' SpendingPulse reported retail sales were strong in October, with gains seen in apparel, luxury goods, and online sales.
And a trade group reported U.S. mortgage applications, both for purchase and refinancing,dropped 5.0 percent for the week ended Oct. 29, marking the sixth time in eight weeks of slowing activity. The four-week moving average was up 0.1 percent, according to the Mortgage Bankers Association.
President Barack Obama will hold a news conference at 1 p.m. EDT time to discuss the election.
In Europe, shares drifted higher in early trade, supported by expectations that the Fed will boost the US economy injecting fresh liquidity in the markets.
On Tap Next Week:
WEDNESDAY: FOMC announcement; auto sales, oil inventories; after-the-bell earnings from Chesapeake Energy, News Corp, Prudential Financial and Transocean.
THURSDAY: Chain-store sales, BoE announcement, jobless claims, productivity and costs, ECB announcement; after-the-bell earnings from Kraft and Starbucks.
FRIDAY: Pending home sales index, non-farm payrolls report, consumer credit; Kansas City Fed President Hoenig speaks; before-the-bell earnings from Toyota; after-the-bell earnings from Berkshire Hathaway.
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