May 29, 2013 at 4:01 PM ET
Stocks closed in the red on Wednesday, dragged down by consumer staples and telecoms, as investors continued to question when the Federal Reserve might curtail its stimulus program.
"While we expect the S&P to be range bound...you can expect more days like the last two," wrote Elliot Spar, market strategist at Stifel Nicolaus.
"Longs are nervous, they don't want to give up too much of their gains while those that missed the boat or are short, try to get on board. If you are not nimble in this range it is very easy to get whipsawed."
(Read More: Dow 28,000 Possible in 6 Years: BlackRock's Fink)
The Dow Jones Industrial Average finished down nearly 100 points, at 15,303.33, dragged by Verizon and Coca-Cola, wiping out most of its gains from the previous session. The blue-chip index had been down nearly 200 points at its session low.
Most key S&P sectors ended lower, with defensive sectors telecoms and consumer staples among the worst performers.
"The market was at overbought levels and you can see these short-term pullbacks in the market, but as far as an extended correction in the market, we're not expecting that," said Paul Hickey, co-founder of Bespoke Group. "We'd recommend that people scale in here and buy some cyclical names—financials are holding in well and with the yield curve widening out here, that's positive for the [sector]."
Major averages had rallied on Tuesday, lifted by a pair of better-than-expected economic reports and supportive comments from central banks around the world. Traders will continue to closely track economic data for signs that momentum is picking up, which would make it more likely that the Fed would curtail or stop its bond buying.
While there are no major economic data reports on Wednesday, investors will be looking ahead to Thursday's weekly jobless claims and first quarter GDP reports.
The Organization of Economic Cooperation and Development, in its latest economic outlook on Wednesday, said the United States would drive global growth, projecting an expansion in GDP of 1.9 percent in 2013 and 2.8 percent in 2014. But the OECD also cuts its global growth forecast for this year to 3.1 percent from 3.4 percent previously.
On the economic front, mortgage rates jumped to their highest level in a year last week, drying up demand for home refinancings, amid worries the Federal Reserve may begin to slow its stimulus efforts, according to the Mortgage Bankers Association.
Treasury prices added to their gains after the government sold $35 billion in 5-year notes at a high yield of 1.045 percent. The bid-to-cover, an indicator of demand, was 2.79.
(Read More: The 'Great Rotation'—Is It Finally Happening?)
© 2013 CNBC LLC. All Rights Reserved