Bulls Make Their Comeback

Traders were reviewing Tuesday's economic releases for more clues on the direction of the U.S. economy. The Labor Department said fourth-quarter productivity rose by a revised 1.6%, in line with projections. Unit labor costs, however, doubled expectations, with a 6.6% rise for the quarter.

Ian Shepherdson, chief economist with High Frequency Economics, said he views the data as "another reason to worry about stocks, because rising [unit labor] costs and slower growth mean downward pressure on margins."

Also on the economic docket, the Census Bureau said factory orders fell 5.6% in January, steeper than expectations for a 4% decline. Elsewhere, the National Association of Realtors said pending home sales dropped 4.1% in January.

Treasuries lost ground. The 10-year note was down 9/32 in price, yielding 4.53%, and the 30-year bond fell 13/32 to yield 4.66%.

Commodities reversed some of the previous session's losses. Crude oil was higher by 62 cents to close at $60.69 a barrel at the New York Mercantile Exchange, and gold added $7 to $646.20 an ounce. Natural gas was tacking on 22 cents to $7.47 per million British thermal units.

In corporate news, Citigroup offered to buy Japanese firm Nikko Cordial for nearly $11 billion. Shares of Citigroup ended up $1.33, or 2.7%, to $50.58.