A disappointing report on services industries halted a two-day advance in the stock market.
The Dow Jones industrial average fell 26 points Wednesday after jumping a total of 230 points in the first two days of the week. The broader Standard & Poor's 500 index posted a steeper drop, while the Nasdaq composite index was little changed.
The report on services businesses, which make up the biggest slice of the U.S. economy, reminded investors that a recovery will be slow.
The Institute for Supply Management said its index of service activity rose to 50.5 in January from a revised 49.8 in December. The January reading was below the level of 51 analysts polled by Thomson Reuters had been expecting. Any number above 50 signals growth.
The weaker activity in service companies chilled enthusiasm about a report that private employers cut fewer jobs than expected last month. The news on jobs from ADP, a payroll company, comes ahead of the government's January employment report on Friday, which is expected to show employers added 5,000 jobs in the first month of the year but that unemployment edged up to 10.1 percent from 10 percent.
ADP said employers cut 22,000 non-farm, private jobs last month. That was the best showing since employment started to weaken in February 2008.
A reduced forecast from Pfizer Inc. dragged health care stocks lower. Meanwhile, bank stocks fell after PNC Financial Services Group Inc. said it would repay $7.6 billion in bailout funds to the U.S. government. Traders grew concerned that other regional banks would face pressure to follow suit.
Stocks jumped the first two days of this week on encouraging reports about the economy. The advance came after stocks ended January with a loss. The market retreated late last month on concerns that the recovery was faltering and a strong 10-month rally was running out of steam.
Events in Washington continued to ripple through the stock market. Transportation Secretary Ray LaHood said he misspoke when he said early Wednesday that owners of Toyota cars and trucks should stop driving them because of problems with accelerator pedals in some models. Toyota shares fell sharply but pulled off their lows after LaHood clarified his remarks.
The zigzag in Toyota's stock was the latest reminder that events in Washington are high on investors' list of concerns. Worries that tougher laws, including President Barack Obama's proposal to restrict banks trading activity, would hurt profits helped drive the market lower last month.
"It isn't surprising that when you get this sort of populist uprising and everybody kind of plays to that," said Max Bublitz, chief strategist at SCM Advisors in San Francisco. "You're going to get these spikes of volatility."
According to preliminary calculations, the Dow fell 26.30, or 0.3 percent, to 10,270.55. The S&P 500 index fell 6.04, or 0.6 percent, to 1,097.28, while the Nasdaq rose 0.85, or less than 0.1 percent, to 2,190.91.
Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 1.2 billion Tuesday.
The Dow rose Monday and Tuesday on upbeat reports about manufacturing and housing. The 230-point gain was the biggest back-to-back advance for the Dow in three months.
In other trading Wednesday, bond prices fell and pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.71 percent from 3.65 percent late Tuesday.
The dollar rose against other major currencies, while gold fell.
Crude oil fell 25 cents to $76.98 per barrel on the New York Mercantile Exchange.
Kim Caughey, vice president and investment analyst at Fort Pitt Capital Group in Pittsburgh, said the economic numbers are driving short-term trading but that uncertainty about how lawmakers might rewrite the rules that govern corporations is still hanging over the market.
"There is tough language in some bills out there that if passed currently could prove chilling," she said. "I'm betting that that there will be some damage done but not nuclear Armageddon."
Pfizer Inc. posted increased fourth-quarter earnings but the results were weaker than analysts had forecast. The stock fell 44 cents, or 2.3 percent, to $18.62.
PNC fell 94 cents, or 1.7 percent, to $53.71 after saying it would repay bailout money.
Other regional banks posted steeper drops. Fifth Third Bancorp fell 48 cents, or 3.9 percent, to $12, while Huntington Bancshares Inc. slid 22 cents, or 4.5 percent, to $4.71.
Toyota Motor Corp. fell $4.69, or 6 percent, to $73.49 after sliding as much as 8 percent.
The Russell 2000 index of smaller companies fell 3.39, or 0.6 percent, to 610.66.
Britain's FTSE 100 fell 0.6 percent, Germany's DAX index lost 0.7 percent, and France's CAC-40 fell 0.5 percent. Japan's Nikkei stock average rose 0.3 percent.