Stocks see-sawed all day before closing little changed on Wednesday as Wall Street sifted through economic reports for hints as to when the Federal Reserve would reduce its stimulus, with investors on shaky ground two days before the release of the November jobs report.
"There are certainly increasing signs that the market is a bit tired," said Jim Dunigan, managing executive, investments, PNC Wealth Management.
After rising nearly 46 points early on and falling as much as 123 points, the Dow Jones Industrial Average closed 24 points down. The S&P 500 was just 2 points down and the Nasdaq rose barely one point.
Both the Dow and S&P 500 were also on pace to halt an eight-week winning streak.
The CBOE Volatility Index (VIX), a gauge of investor uncertainty, rose above 15.
The U.S. dollar held steady against other currencies; dollar-denominated commodities, with crude futures climbing to $97.20 a barrel and gold futures rising from a five-month low to $1,247.20 an ounce.
"We're hoping after the first of the year the market goes back to trading on fundamentals and earnings growth. In the short run, it still seems to be trading on interest rates," said Mike Serio, chief investment officer at Wells Fargo Private Bank.
Once the Fed starts cutting its $85 billion in monthly bond purchases, the market will "transition very quickly to wanting the economy to do better," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
The benchmark yield, used in figuring mortgage rates and other consumer loans, was recently up 5 basis points at 2.84 percent.
The 10-year Treasury yield touching 2.85 percent "triggered another wave of selling," said Peter Boockvar, chief market analyst at the Lindsey Group. "This is all about interest rates, mixed with a buy-on-the-dip mentality. We will go to 3 percent on a good payroll number," he added of the Labor Department data to be released in two days.
The market "wants a number that disappoints, because it will relieve the taper talk for at least another month," said Luschini at Janney Montgomery Scott.Equities moderated their decline some after the release of the Fed's Beige Book, which found expansion in the manufacturing and housing sectors, but hiring modestly up or little changed.
Ahead of Wall Street's open, stock-index futures had furthered their decline after the release of the Automatic Data Processing employment report, which found 215,000 jobs created during November, versus expectations for 173,000.
Labor Department data on Friday could have the unemployment rate declining to 7.2 percent.
"The number was really, really good, not just the 215,000, but manufacturing, which came out strong, and also the revision from last month," said Serio at Wells Fargo Private Bank.
The S&P 500 has risen 26 percent this year as the Fed has held off on cutting its monthly asset purchases.
Wednesday's economic reports also had the U.S. trade deficit narrowing to $40.6 billion in October, versus expectations for the gap to narrow to $40 billion.
Commerce Department data had new-home sales down 6.6 percent in September and up 25.4 in October. A separate report had the Institute for Supply Management's non-manufacturing index edging lower to 53.9 in November from 55.4 the month before.
The Federal Open Market Committee meets Dec. 17-18, with many analysts still expecting the central bank to hold off until its March meeting to start reducing their asset purchases.
First published December 4 2013, 1:11 PM