Stocks declined slightly on Wednesday as a broker's weak outlook on some chip makers weighed on the sector, while data showing continued growth in the services sector helped limit losses.
The report on the services sector supported the view that the economy is holding ground, analysts said.
Intel Corp. shares weighed on the S&P 500 and Nasdaq after Morgan Stanley initiated coverage of the company with an underweight rating and a price target of $22, saying it expects an inventory correction and an increasingly aggressive price environment.
The brokerage also initiated coverage of Advanced Micro Devices Inc. with an underweight rating.
Investors also were taking profits after stocks' rise to record highs earlier this week.
The Dow Jones industrial average was down 29.51 points, or 0.21 percent, at 14,017.80. The Standard & Poor's 500 Index was down 3.69 points, or 0.24 percent, at 1,542.94. The Nasdaq Composite Index was down 4.73 points, or 0.17 percent, at 2,742.38.
I think this is just a little bit of a pullback. We went through 14,000 (on the Dow) pretty quickly, and the market is paring some of the sharp recent gains, said Victor Pugliese, director of listed equity trading at First Albany Corp. in New York. He added the services data helped a little bit.
The Institute for Supply Management's nonmanufacturing index fell last month to a level slightly below economists' expectations but still showed the vast services sector of the economy was growing.
In other sectors, shares of major manufacturer 3M Co. (MMM.N: Quote, Profile, Research) rose 0.7 percent to $94.53, helping to limit losses on the Dow and S&P 500.
Intel fell 1.3 percent to $26.02, while Advanced Micro was down 1.9 percent at $12.95.
Memory chip maker Micron Technology Inc. dropped 8 percent to $10.86 after the company late Tuesday posted a quarterly loss, reversing a year-ago profit.