Stocks fell on Wednesday as lower oil prices hurt energy shares and caution before the Federal Reserve's policy decision offset optimism from a report of a potential takeover in the technology sector.
Losses on Nasdaq, however, were limited by a 65 percent run-up in the shares of Sun Microsystems
On the other hand, a 2.3 percent drop in the shares of IBM weighed on the Dow. The technology bellwether, with more than $120 billion in market capitalization, is among the blue-chips whose heft dictates the Dow and the broader market's direction.
While we had a nice up-day yesterday, I think it's pretty clear that some level of giveback has to be undergone, said Dan Greenhaus, market analyst at Miller Tabak & Co in New York, referring to a run-up in the market that followed a drop to 12-year lows earlier this month.
You had a couple of pieces of information this morning including news on IBM. These days every M&A deal is encouraging, but again IBM is an incredibly strong company and Sun Micro is an incredibly weak company.
The Dow Jones industrial average <.DJI> fell 98.61 points, or 1.33 percent, to 7,297.09. The Standard & Poor's 500 Index <.SPX> shed 8.39 points, or 1.08 percent, to 769.73. The Nasdaq Composite Index <.IXIC> dipped 5.56 points, or 0.38 percent, to 1,456.55.
Investors were now focusing on the U.S. central bank's policy meeting, which will yield a statement at around 2:15 p.m. EDT.
With the Fed already having cut interest rates close to zero, attention was on whether it would commit itself to buying long-dated government debt as an additional measure to revive the economy.
Concerns about the fallout from the mounting furor over bonuses paid to executives of embattled insurer American International Group
Sun Micro, up 65.2 percent to $8.21, ranked as the Nasdaq's second top boost behind Apple Inc
IBM shares declined 2.3 percent to $90.79.
Also heading lower was Morgan Stanley
(Editing by Chizu Nomiyama)