Tech shares fell on Wednesday after Dell's disappointing sales outlook fanned worries weak economic growth will hurt earnings in the third quarter.
The Dow and S&P indices ended little changed in an up-and-down session where investors sold growth sectors in favor of defensive shares like telecoms and utilities.
Computer maker Dell
You don't usually see tech down so sharply while the rest of the market is down less, which shows that the latest earnings have created a lot of concerns, said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.
Retailers slipped following a weak report from Abercrombie & Fitch, despite good news from Target. With 94 percent of S&P companies reporting earnings, 72 percent have beaten expectations.
The Dow Jones industrial average <.DJI> was up 4.28 points, or 0.04 percent, at 11,410.21. The Standard & Poor's 500 Index <.SPX> was up 1.12 points, or 0.09 percent, at 1,193.88. The Nasdaq Composite Index <.IXIC> was down 11.97 points, or 0.47 percent, at 2,511.48.
Concerns that the U.S. economy may be headed for another recession and that Europe may be unable to stem its financial troubles have hit the market, with a strong earnings season one of the few bright spots for traders, though they often have not been enough to offset macroeconomic woes.
So with technology concerns, and then more than our fair share of recession concerns and continued concerns about Europe, we're in a real 'three strikes, you're out' situation today with no reason to buy, Colas said.
Both Abercrombie & Fitch
Abercrombie dropped 8.7 percent to $64.87 while Deere lost 1.2 percent to $74.26 and was one of the biggest drags on industrial shares. The S&P retail index <.RLX> fell 0.6 percent.
On the upside, Target Corp
Stocks started the day with solid gains but turned lower by midday. Declining stocks outnumbered advancers on the Nasdaq by about seven to six. On the New York Stock Exchange, three stocks rose for every two that fell.
The day's moves were reminiscent of the sharp downward swings last week after Standard & Poor's downgrade of the United States' top-tier credit rating on August 5. The top two S&P sectors were telecom <.GSPL>, up 1.6 percent, and utilities <.GSPU>, up 0.8 percent. Both groups are considered defensive strategies.
On Tuesday German Chancellor Angela Merkel and French President Nicolas Sarkozy disappointed investors when they failed to offer plans to boost the size of a euro zone rescue fund or begin sales of euro bonds.
U.S. wholesale prices outside of food and fuel rose at the fastest pace in six months in July, but weak domestic demand was seen keeping inflation pressures in check.
Trading volume slowed from last week to 7.17 billion on Wednesday, down from the daily average of approximately 16 billion shares traded last week.
(Editing by Kenneth Barry)