U.S. stock indexes closed slightly lower Wednesday, stabilizing a day after their biggest sell-off in two months.
With no obvious catalyst pushing them either way, the major indexes spent most of the day wavering between slight gains and losses.
Investors are waiting for clues from a Federal Reserve meeting next Wednesday as to when it may start increasing interest rates. The prospect of higher rates and a surge in the dollar have been weighing on markets since indexes hit record highs last week.
"Stocks again looked weak, trading in a narrow range without a major break in either direction," Rob Williams, deputy editor of NewsmaxFinance, said on "The Steve Malzberg Show" on Newsmax.TV. "We hit a month low tomorrow before climbing next week into options expiration on March 20."
Story continues below video of NewsmaxTV's market commentary.
"Investors are reassessing whether yesterday's sell-off made sense," said David Lefkowitz, senior stock strategist at UBS. "We still like stocks."
The Dow Jones industrial average lost 27.55 points, or 0.2 percent, to close at 17,635.39. The Standard & Poor's 500 index lost 3.92 points, or 0.2 percent, to 2,040.24. Both indexes are down now about 1 percent in 2015.
The Nasdaq composite fell 9.85 points, or 0.2 percent, to 4,849.94. The Nasdaq is up 2.4 percent this year.
The odds of the Fed raising rates appeared to rise on Friday after the U.S. government reported a burst in hiring last month. A rate increase would be the first in nine years. Low rates and other monetary stimulus have helped the S&P 500 to triple in price since the bull market began six years ago.
A U.S. interest rate rise would come as Japan and Europe are struggling to grow and as China's expansion slows. On Wednesday, China's official Xinhua news agency reported that output in the world's second-biggest economy rose 6.8 percent in the first two months of the year, less than expected. China is expected to slow further after growing 7.4 percent last year, the slowest rate in nearly a quarter-century.
"You have three out of four major drivers of economic growth still struggling," said Bill Strazzullo, chief market strategist at Bell Curve Trading. "Can the U.S. go it alone, especially with rates heading higher?"
Strazzullo said he wouldn't be surprised if the S&P 500 fell 10 percent in the coming months.
UBS's Lefkowitz is more optimistic. He said he doesn't think higher interest rates will hurt the U.S. economy because it has been steadily strengthening. After Tuesday's stock market tumble, he published a report showing that, in the six months after initial Fed rate hikes going back to 1954, the S&P 500 has rallied an average 7.6 percent.
David Lebovitz, Global Market Strategist for J.P. Morgan Asset Management, also thinks interest rate fears are overblown. "I think a couple of months after the Fed hikes, the market will be higher," he said.
The prospect of higher rates attracts money to the U.S. from investors seeking higher returns, pushing up the value of the dollar. The dollar has been rallying against several currencies.
Adding to currency market turmoil is a split in central bank policies. As the Fed is poised to raise rates, the European Central Bank is trying to lower them. On Monday, the ECB started buying European government bonds to stimulate the economy of the 19-country eurozone. The Fed ended its own bond-buying program, called quantitative easing, or QE, last year.
The divergent policies are hammering the euro. On Wednesday, it fell to $1.0550, its lowest level since April 2003.
Among stocks making big moves:
Apple fell $2.27, or 1.8 percent, to $122.24 after its iTunes and app stores suffered a rare outage, frustrating millions of users around the world. Earlier in the week, Apple announced new details about its Apple Watch and MacBook products.
Clothing retailer Express rose 52 cents, or 3.5 percent, to $15.47 after reporting fourth-quarter results that exceeded Wall Street expectations.
Southwest Airlines rose 90 cents, or 2 percent, to $43.84. The airline said its flights were more crowded and a key revenue figure increased in February compared with a year earlier.
Vera Bradley, a handbag and accessories company, plunged $2.93, or 16 percent, to $15.14. The company reported fourth-quarter results below analysts' estimates. Its updated outlook for the fiscal 2016 also disappointed.
The price of U.S. oil fell slightly after the Energy Department reported an increase in inventories that was only slightly larger than analysts had expected. Benchmark U.S. crude fell 12 cents to close at $48.17 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $1.15 to close at $57.54 a barrel in London.
In the bond market, U.S. government bond prices rose, pushing yields lower. The yield on the 10-year Treasury note fell to 2.11 percent from 2.13 percent on Tuesday.
Precious and industrial metals futures closed lower. Gold fell $9.50 to $1,150.60 an ounce, silver fell 27 cents to $15.37 an ounce and copper fell two cents to $2.61 a pound.
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