Stocks Mixed Ahead of Bell; Energy Falls

Stocks fluctuated in the final hour of the session, adding back losses even as oil prices continued to fall amid rumors involving Libyan leader Muammar Gaddafi.

The Dow Jones Industrial Average fell more than 20 points, after falling more than 100 points earlier in the session, but also after retreating to a 4-point drop earlier in the final hour. The blue-chip index sank 107 points amid spreading unrest in the Middle Easton Wednesday.

Hewlett-Packard and Travelers led Dow decliners, while Boeing and General Electric led gainers.

The S&P 500 traded flat and the tech-heavy Nasdaq advanced. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank more than 5 percent, below 21, after posting strong gains over the previous two sessions.

Among key S&P 500 sectors, energy, materials and telecom fell, while industrials and technology rose.

Stock bounced off the lows of the day as the price of U.S. light crude fell, closing at $97.28 a barrelamid unconfirmed rumorsthat Libyan leader Muammar Gaddafi was shot. However, U.S. officials said they have no reason to believe Gaddafi is dead. Earlier, oil prices had traded near $100 a barrel; London Brent crude gave up gains and closed slightly higher at $111.36 a barrel. Prices also eased after news Saudia Arabia was in talks with Europeanrefiners to cover any shortfall caused by the Libyan turmoil.

The energy sector led market declines much of the session, largely weighed down by the refiners. Halliburton , Schlumberger and Transocean were among the top laggards.

Gold, meanwhile, settled above $1,415 an ounce, but then traded lower. The dollar fell slightly against a basket of currencies.

Despite a spate of economic news, including a surprising drop in jobless claims, traders are focusing on Libya, said Todd Schoenberger, managing director at LandColt Trading.

"People are worried, just because of that uncertainty factor," Schoenberger said. "Things seem to be escalating. Where does this end? There are deep concerns there."

In the day's earnings news, General Motors tumbled even after the automaker posted earnings slightly above expectations and its first full-year profit since 2004. GM's results come at a pivotal time for investor sentiment in the auto industry, still widely seen as being in the early stage of recovery from its near-collapse in 2008 and 2009.

Target shares rose the retailer posted a 10.5 percent increase in profit. Rival Sears fell more than 5 percent after reporting profits which disappointed. The retailer also announced late Wednesday that it named the former CEO of Avaya, Lou D'Ambrosio, to lead the company after a three-year search. (Read more: Greenberg: Is the New Sears CEO a Joke?)

Meanwhile, shares of soared after the online travel company posted good results thanks to a surge in international bookings, and provided an optimistic outlook. At least seven brokerages raised their price targets for the company.

AIG , Gap, and Salesforce are companies expected to report earnings after the close.

Also in corporate news, Toyota Motor fell slightly after news the automaker was recalling 2.17 million vehicles in the United States to fix accelerator pedals.

On the economic front, new home sales fell 12.6 percentin January to a seasonally-adjusted 284,000 from a drop of 8.8 percent to a downwardly revised 324,000 pace a month earlier. Economists surveyed by Reuters had expected sales to fall to a 310,000-unit pace last months.

Most of the homebuilders fell following the news, including DR Horton , PulteGroup and Toll Brothers .

Also in economic news, initial claims for unemployment fell by 22,000 to 391,000 for the week ended Feb. 19, the Labor Department reported. That's down from 413,000 from a week ago. The four-week moving average of claims fell to 402,000, the lowest since mid-2008.

And new orders for durable goods soared 2.7 percent in January due to a boost in aircraft bookings, the Commerce Department said. The increase was in line with expectations.

Treasury prices held onto their gainsafter the government auctioned $29 billion in 7-year notes at a high-yield of 2.854 pecent, with a bid-to-cover ratio of 2.86, all largely in line with expectations. The 10-year Treasury note rose 12/32 to yield 3.442 percent.

Treasurys have largely benefited as investors have viewed bonds as a safe haven, LandColt's Schoenberger said.

Shares in Europe fell for the fourth consecutive dayon the turmoil in Libya.

On Tap This Week:

THURSDAY: Earnings after-the-bell from AIG, First Solar, Gap and Salesforce.
FRIDAY: GDP (second reading), consumer sentiment; earnings before-the-bell from JCPenney.

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