The Dow industrials slipped and the S&P 500 was up slightly on Wednesday as news that International Business Machines Corp was in talks to buy Sun Microsystems pulled IBM's stock lower, more than offsetting a rise in financials.

But the Nasdaq rose as investors snapped up shares of technology bellwethers, including Apple , which rose above $100 for the first time since early February.

Investors were cautious before the Federal Reserve's policy statement at 2:15 p.m. EDT

Shares of Sun Microsystems surged nearly 79 percent to $8.90 after the Wall Street Journal reported that IBM was likely to pay $10 to $11 per share to buy the computer maker. The price implies a premium of more than 100 percent from Sun Micro's closing price on Tuesday.

IBM's stock fell 2.7 percent to $90.45, which weighed on the Dow. IBM, with more than $120 billion in market capitalization, can determine the direction of both the Dow average and the broader market.

Shares of computer maker and Dow component Hewlett-Packard lost 2.4 percent to $29.04.

The Dow Jones industrial average <.DJI> fell 48.67 points, or 0.66 percent, to 7,347.03. The Standard & Poor's 500 Index <.SPX> edged up 0.63 of a point, or 0.08 percent, to 778.75. The Nasdaq Composite Index <.IXIC> gained 10.83 points, or 0.74 percent, to 1,472.94.

Exxon Mobil was the second-biggest drag on the Dow , behind IBM. Exxon's stock was down 1.7 percent at $67.84$67.69 as U.S. crude prices fell $1.00 to $48.16 a barrel.

But a rise in financial shares helped cushion the broader market, following comments from Bank of America's chief executive, who said the largest U.S. bank could repay $45 billion in government funds this year.

The KBW bank index <.BKX> rose 5.5 percent and extended its rally from last week to about 50 percent. Citigroup added 22.7 percent to $3.08 and Bank of America rose 14 percent to $7.15.

With the Federal Reserve already having cut interest rates close to zero, investors now are focused on whether the U.S. central bank will commit to buying long-dated government debt as an additional measure to revive the economy.

A Fed statement is due around 2:15 p.m. EDT.

(Editing by Jan Paschal)