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Stocks fade after touching new highs

U.S. stocks faded in late trading Tuesday after the S&P 500 hit a four-year high on hopes that central banks will act in the near future to stimulate the global economy.

The Standard & Poor's 500 hit the year's intraday high of 1,426.68, its highest since May 2008, in late morning trading on Tuesday. The benchmark index has risen 3 percent so far in August.

Most of that gain has come in rallies on a few outsized days, while other sessions have seen small incremental increases. Volume has been light as investors wait for central banks' meetings next month where policymakers are expected to take action to ease Europe's debt crisis and boost the economy.

"Obviously, market participants are expecting something positive out of central banks. The major question now is: 'Are they right? Are they getting too ahead of themselves?"' said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

The CBOE Volatility Index or VIX, Wall Street's fear barometer, rose 4 percent to 14.58. The VIX usually moves inversely to the S&P 500.

The Dow Jones industrial average was down 68.06 points, or 0.51 percent, at 13,203.58. The Standard & Poor's 500 Index was down 4.96 points, or 0.35 percent, at 1,413.17. The Nasdaq Composite Index was down 8.95 points, or 0.29 percent, at 3,067.26.

Technology stocks were the day's underperformers.

Facebook Inc director Peter Thiel sold roughly $400 million worth of shares in the Internet social networking company last week, cashing out most of his stake. The sale comes as Facebook's stock lost 50 percent of its value since its IPO earlier this year. In Tuesday's session, Facebook shares fell 2.2 percent to $19.57.

The chief executives of Apple Inc and Samsung Electronics Co Ltd have talked, but did not settle the high-stakes patent dispute between the two electronics companies, a Samsung attorney said in court on Monday.  Apple shares fell 1.4 percent to $655.66.

Talk of ECB intervention in debt markets resurfaced after a weekend report in Der Spiegel, German magazine, that the central bank would target specific yield levels as part of any bond-buying program. The ECB tried to quash that speculation on Monday, but traders cited a story in The Daily Telegraph, a British newspaper, saying it could confirm the reports that ECB experts were examining plans to effectively cap Spanish and Italian debt yields.

While that does not advance the process of the ECB actually intervening - still largely dependent on German political leaders' attitude at key meetings next month - investors see that as evidence that the ECB is moving closer to action.

The euro rallied to a seven-week high against the dollar on Tuesday, bolstered by talk that the European Central Bank will take action to ease Spanish and Italian borrowing costs.

Best Buy Co shares lost 2 percent to $17.79 after hitting a 52-week low of $16.25 earlier in the day. The company cut its fiscal-year profit outlook on Tuesday, citing lower expectations for industrywide sales and uncertainty about key product introductions. The consumer electronics retailer also suspended its share buybacks for the year.

(AP and Reuters contributed.)