Healthcare stocks took a beating after both Abbott Laboratories and Gilead Sciences Inc cut profit forecasts. Both Abbott and Gilead cited the impact of costs from U.S. healthcare reform in their outlooks.
The two represented a setback in an otherwise upbeat earnings season so far.
We still have a lot more news on how healthcare stocks are going to be affected. Slowly people will figure out winners and losers as the law gets implemented, said Giri Cherukuri, head trader at OakBrook Investments Lisle, Illinois. With all the good earnings we've had lately, you're getting a bit of profit-taking.
Shares of Gilead tumbled nearly 10 percent to $40.76, a day after reporting results. Abbott lost 2.4 percent to $51.78.
The S&P 500 crisscrossed the key support level of 1,200, which if lost may unleash more downward pressure after the benchmark index breached a key uptrend line from early February late last week. The broad index is still up 78 percent from the March 2009 bottom.
The Dow Jones industrial average <.DJI> edged up 7.86 points, or 0.07 percent, at 11,124.92. The Standard & Poor's 500 Index <.SPX> dipped 1.23 points, or 0.10 percent, to 1,205.94. The Nasdaq Composite Index <.IXIC> inched up 4.30 points, or 0.17 percent, to 2,504.61.
Among gainers, Morgan Stanley shares climbed 4.04 percent to $31.68 after posting a stronger-than-expected profit on strong fixed income trading. [ID:nN20196867] The KBW Banks index <.BKX> edged up 0.9 percent.
Regional banks reporting on Wednesday included KeyCorp , which jumped 4.2 percent to $8.94 after the Midwestern bank posted a smaller-than-expected first-quarter loss. The S&P regional banks index <.GSPBNKS> gained 1.7 percent.
Apple shares advanced 6 percent to $259.22 -- a lifetime closing high, helping the Nasdaq end the session in positive territory a day after Apple posted quarterly results that eclipsed forecasts on record iPhone sales and forecast strong revenue growth.
During the session Apple hit an all-time intraday high of $260.25.
But drugmaker Merck & Co fell 3.6 percent to $34.74 and was the Dow's biggest drag, while Bristol Myers dropped 1.3 percent to $25.10. The NYSE Arca Pharmaceutical index <.DRG> declined 1.3 percent and the S&P healthcare index <.GSPA> fell 1.8 percent.
Worries about Greece's debt woes lingered, with Greek borrowing costs surging to a 12-year high on Tuesday. Talks on a potential aid deal with the EU and IMF began on Wednesday.
Financial stocks may claim the spotlight on Thursday as U.S. President Barack Obama is scheduled to visit New York and expected to urge Wall Street to get behind financial regulatory reform.
(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)