Wall Street dips modestly, but Apple extends rally

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks were slightly lower on Wednesday as investors found few reasons to make big bets, with equities near all-time highs and little clarity over Federal Reserve policy.

Apple Inc was one of the biggest gainers of the day, rising 1.7 percent to $498.28 to extend a rally that began Tuesday after activist investor Carl Icahn tweeted that he had built a "large position" in the tech company. However, those gains didn't translate to a broader advance.

Wall Street has struggled for direction recently, with the S&P 500 trading in a narrow range over the past month. During that period, the index has only closed once with a move greater than 1 percent.

 

Trading volume has been among the lowest of the year, as earnings season winds down and economic indicators present a mixed view of economic growth. Currently, the S&P is less than 1 percent away from its all-time high.

On Tuesday, Atlanta Fed President Dennis Lockhart said the U.S. central bank could begin to slow its quantitative easing (QE) stimulus as early as next month, though data has been too mixed to outline a detailed exit strategy.

"Investors are still trying to assess the Fed and what it will do next, leaving us to bounce around on a daily basis but essentially go nowhere," said Paul Nolte, managing director at Dearborn Partners in Chicago. "Things should be quiet until we get more clarity on that end.

Equities have been tethered to Fed policy for much of the year, and many investors are worried that economic growth may lose momentum without the Fed's bond-buying intervention. Many traders are awaiting clarity on when the program could begin to slow before adjusting positions.

Producer prices were flat in July, below expectations for a 0.3 percent increase. The data could add to worries at the Fed that inflation is too low, but stocks were little impacted by the news.

The Dow Jones industrial average was down 50.10 points, or 0.32 percent, at 15,400.91. The Standard & Poor's 500 Index was down 2.14 points, or 0.13 percent, at 1,692.02. The Nasdaq Composite Index was down 3.79 points, or 0.10 percent, at 3,680.66.

Stocks have trended lower recently, with the S&P down for five of the past seven sessions. For the year, it remains up almost 19 percent.

Cisco Systems weighed on the Dow, falling 1 percent to $26.06. The company is scheduled to report its quarterly results after the market closes.

Deere & Co fell 1.3 percent to $82.92, even as its third-quarter earnings and sales beat expectations. The stock had advanced in premarket trading.

Shares of Macy's Inc fell 3.8 percent to $46.65 after the company reported its results and cut its full-year profit outlook.

Steinway Musical Instruments Inc jumped 5.6 percent to $40.43 after it agreed to be taken private by Paulson & Co for $40 a share.

Goodyear Tire & Rubber Co rose 1.7 percent to $19.54 a day after the company said one of its largest investors had raised its stake in the company by 44 percent.

European shares rose 0.4 percent, extending a seven-week rally after data showed France pulled out of recession in the second quarter, while Germany posted its largest expansion in more than a year.

(Editing by Bernadette Baum)