NEW YORK (Reuters) - Stocks were little changed on Wednesday as investors found scant reason to continue buying following the best two-day rally for the S&P in a month.
There was optimism that politicians were getting closer to an agreement to avert the "fiscal cliff" - steep tax hikes and spending cuts that will come into effect in the new year - but that was not enough to push the market higher.
"The question has shifted to what a deal will look like and entail, and markets are taking a pause as we consider that," said Scott Eldridge, director of portfolio management at Caprin Asset Management in Richmond, Virginia.
"It seems like all the parties at the table have made steady progress, but it continues to drown out all the other noise in markets."
Republicans in the U.S. House of Representatives could vote on Thursday on a "Plan B" tax bill that would extend low tax rates, except on income of $1 million and above, though the White House said President Barack Obama would veto the proposal.
Investors are concerned the fiscal cliff could send the economy back into recession, though most expect a deal will be reached eventually.
The Dow Jones industrial average <.DJI> slipped 11.80 points, or 0.09 percent, to 13,339.16. The Standard & Poor's 500 Index <.SPX> eased 2.12 points, or 0.15 percent, to 1,444.67. The Nasdaq Composite Index <.IXIC> added 0.36 points, or 0.01 percent, to 3,054.89.
Markets have been buoyed in recent weeks by any signs that an agreement between policy makers over the budget may be reached, with banks and energy shares - groups that outperform during periods of economic expansion - leading gains.
The S&P added 2.3 percent over the past two sessions, the first time it has notched two straight days of 1 percent gains since late July. Still, trading has been light ahead of the holidays, and with investors' focus on the budget talks.
Defensive sectors led the downside on Wednesday, with the utilities sector <.GSPU> slipping 0.7 percent.
Gains in technology shares boosted the Nasdaq after Oracle
Knight Capital Group Inc
(Additional reporting by Ryan Vlastelica; Editing by Bernadette Baum)
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