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Stocks close little changed for a third day

Updated at 4:05 p.m. ET: Stocks closed Wednesday little changed for a third day on low volume and with few catalysts to give investors direction.

The market’s sideways trading is likely to continue through the end of the week when monthly options expire, analysts say.

"I think we are facing technical resistance at 1,405 [on the S&P 500 index] which is the level of closing highs in early May. We haven't been at that level since, and until we have a catalyst to move significantly above this, the market is likely to consolidate," said Randy Frederick, managing director of active trading & derivatives at Charles Schwab.

Despite incremental gains, stocks have basically been little changed for more than a week with the S&P 500 hovering close to a four-year high. Light volumes and a lack of news from Europe have also contributed to the inertia.

In the options market, both August call and put options on the S&P 500 are clustered around 1,400, meaning market-makers could pin the index at the level to maintain a market neutral position and see most of those options expire worthless on Friday.

“At 1,400 there could be the potential for a pinning action where those options ultimately expire worthless,” said Todd Salamone, vice president of research at Schaeffer's Investment Research.

In economic data, U.S. industrial output expanded 0.6 percent last month, the fastest pace since April. Manufacturing notched another solid advance, hinting at underlying resilience in an economy that has struggled to establish momentum.

The New York Fed's general business conditions index for August missed expectations and contracted for the first time since October 2011. Meanwhile, Labor Department data showed consumer prices were flat in July for a second straight month and the year-over-year increase was the smallest since November 2010.

Shares of Deere & Co slipped after the world's largest agricultural equipment maker reported a lower-than-expected quarterly profit on Wednesday, citing weak sales in China, India and other emerging markets.

Staples Inc slumped as the worst performer on the index after the office supply chain reported lower-than-expected quarterly revenue on weak demand in North America, Europe and Australia, and forecast flat sales for the fiscal year.

The S&P 500 rallied early in August and reached highs not seen since early May in anticipation that central banks in the United States and Europe zone will take action to stimulate their respective economies in September.

But the momentum has waned. The benchmark S&P has been unable to muster a move of more than 0.22 percent in either direction over the past five sessions. Volume has been among the lightest of the year so far.

Data from the National Association of Home Builders showed homebuilder sentiment rose in August to 37, its highest level in more than five years, and above the 35 in July.

Reuters contributed to this report.