The Dow Jones industrial average fell 5.01 points, or 0.03%, to 15,440.23. The Standard & Poor's 500 index dropped 3.56 points, or 0.2%, to 1,751.64 and the Nasdaq composite index fell 19.97 points, or 0.5%, to 4,011.55.
Investors had hoped to build on the previous day's rebound but failed. Wall Street is trying to decipher whether Tuesday's gains were anything more than a "minor bounce in the context of a short-term downtrend," Tony Venosa, senior options strategist at Schaeffer's Investment Research told clients in a note.
At its closing low point this year, the S&P 500 was down as much as 5.8%, which is less than the average decline of 8.2% for 19 pullbacks of 5% or more since the bull market began in March 2009, according to Bespoke Investment Group.
In economic news, Wall Street was digesting a weaker-than-expected report on private industry job creation. Payroll processor ADP said private employers added 175,000, which was 10,000 below expectations but still in line with the recent longer-term trend in job growth of 175,000 to 200,000 per month. The ADP number was also near the 182,000 new jobs expected by economists when the government reports its January employment report Friday.
A reading on the health of the nation's services economy in January came in better-than-expected. The ISM's non-manufacturing index rose to 54 in January, above analyst expectations and above the 53 reading in December.
"The rise in the U.S. ISM non-manufacturing index makes us more confident that the recent weakness of some of the other incoming data is just due to temporary weather effects," said Paul Dales, senior U.S. economist at Capital Economics. "The 175,000 rise in the ADP measure of private sector employment in January, which wasn't that much below December's 227,000 gain, is another sign that the economy has not stalled."
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Earnings continued to come in as well, with retailer Ralph Lauren topping earnings expectations and upping its sales and revenue outlook for 2014. Cable operator Time Warner also topped earnings expectations by 2 cents and also boosted its dividend and announced a $5 billion share buyback.
After Wednesday's closing bell, Twitter, the microblogging site, reports its first-ever quarterly earnings results since going public late last year.
Stocks, which remain vulnerable to selling, are also sporting signs of being "oversold" amid the 2014 rout. For example, only around 20% of stocks in the S&P 500 are now trading above their average price for the past 50 days, according to Strategas Research Partners. And the nearly 6% drop in the current pullback is nearing the average of prior pullbacks.
Asian stocks were mostly higher Wednesday, reversing a large drop on Tuesday. Japan's Nikkei 225 closed up 1.2% to 14,180.38 after dropping 4.2% on Tuesday, although Hong Kong's benchmark Hang Seng index fell 0.6% to 21, 269.28.
Across Europe, the chief regional bourses ended mixed in a narrow range even though official figures showed that retail sales across the 18-country eurozone suffered their biggest drop in over two and a half years in the crucial shopping month of December.Britain's FTSE 100 index rose 0.1% to 6,457.89 and Germany's DAX index slipped 0.1% to 9, 116.32.
The yield on the 10-year Treasury note edged up to 2.67% from 2.63% on Tuesday.
In energy trading, benchmark U.S. crude for March delivery was up 9 cents at $97.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 76 cents to close at $97.19 on Tuesday.
On Tuesday, stocks rebounded after their worst decline in seven months on Monday . The Dow gained 0.5% to 15,454 while the broader S&P 500 rose 0.8% to 1,755. The Nasdaq composit! e rose 34! .56 points, or 0.9%, to 4,031.52.
TUESDAY: Stocks up after worst February start since 1933
Contributing: Associated Press
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