(REUTERS) - U.S. stocks fell on Wednesday with the S&P 500 stalled near a 10-month-old high after weak data on Europe's business activity raised concerns about a recession.
The S&P has been unable to convincingly pierce the 1,360 level, a high hit last May and a key resistance point that could spark further gains, if broken. The benchmark index is up about 8 percent for the year, and more than 20 percent from October lows.
The euro zone economy may tip into recession, with the services sector shrinking this month along with manufacturing, tempering a wave of optimism over after a Greek bailout deal. The weakness was echoed in China, where data showed export orders fell in their worst performance in eight months.
We had some modestly weak data from Europe and China, but today is mostly just another day of churning as we sit close to that key level of 1,360 on the S&P, said Jack DeGan, chief investment officer at Harbor Advisory Corp. in Portsmouth, New Hampshire.
There is definitely a technical effect on the market and today's selling is related to that. If we punch through the level and stay above, the market could definitely move higher.
Financial stocks were the biggest decliners as investors remained concerned about U.S. banks' exposure to Europe after the euro zone data.
The S&P financial index was down 1 percent. Morgan Stanley fell 2.3 percent to $18.81 and Bank of America Corp. was down 1 percent at $8.03. Citigroup Inc. took off 2.8 percent to $32.42.
The Dow Jones industrial average was down 49.91 points, or 0.38 percent, at 12,915.78. The Standard & Poor's 500 Index was down 6.56 points, or 0.48 percent, at 1,355.65. The Nasdaq Composite Index was down 17.87 points, or 0.61 percent, at 2,930.70.
Dell Inc. slumped 6.4 percent to $17.04 and was one of the biggest drags on the S&P. The world's No. 3 personal computer maker forecast revenue below expectations late Tuesday. The NYSEArca computer hardware index lost 1.6 percent.
Toll Brothers Inc. dropped 5.6 percent to $22.37 after the luxury homebuilder swung to a quarterly loss as fewer deliveries and more contract cancellations hurt revenue.
Fellow computer maker Hewlett-Packard Co. is set to report earnings later Wednesday. The market expects a profit of 87 cents per share, down from $1.36 one year ago.
According to Thomson Reuters data through Wednesday morning, of the 424 companies in the S&P 500 that have reported earnings, 64 percent have topped analysts' expectations.
Earlier, data that showed U.S. home resales surged to a 1-1/2 year high in January.
(Reporting By Angela Moon; editing by Jeffrey Benkoe)