Stock Rally Loses Juice

Updated from 12:58 p.m. EST

Stocks backed off their earlier highs Wednesday afternoon as a bailout plan for the U.S. auto sector made headway in the House of Representatives but saw pointed opposition in the Senate.

The Dow Jones Industrial Average, up about 188 points earlier in the day, was edging down 2.5 points at 8688, and the S&P 500 was up 2 points at 890. The Nasdaq was gaining 4 points at 1551.

House Democrats finalized an agreement for a $14 billion bailout for the Big Three automakers -- Ford (F), General Motors (GM) and Chrysler.

But the plan, under which the government would draw from an existing loan program meant to help the automakers build fuel-efficient vehicles, is facing pushback from skeptical Republicans in the Senate.

In economic data, the Commerce Department reported a 1.1% decline in wholesale inventories in October, wider than the 0.2% cutback predicted by economists and the biggest inventory decline by wholesalers since November 2001.

According to the Mortgage Bankers Association, its Market Composite Index, a measure of mortgage loan application volume, was 796.8 in the week ended Dec. 5, a decrease of 7.1% on a seasonally adjusted basis from 857.7 one week earlier. The refinance share of mortgage activity is now 73.7% of total applications, up from 69.1% the previous week. Meanwhile, credit watch agency TransUnion reported that average bank credit card debt in the third quarter increased nearly 1.6% over the second quarter and 6% from the third quarter of 2007 nationwide.

In company news, insurance behemoth America International Group (AIG) owes Wall Street firms as much as $10 billion for speculative trades that went south, according to a report in The Wall Street Journal. The trades, which the company argues are "credit protection instruments", were not previously detailed, and thus the losses aren't covered in the government's $150 billion bailout package. It remains to be seen how AIG plans to pay them off. AIG's shares were on the decline Wednesday morning.