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Stocks Pull Back From Record Highs

NEW YORK ( TheStreet) -- The S&P 500 slipped Wednesday, shying away from topping the 1,700 mark after coming within just points of what would have been a milestone mark for the index as caution prevailed.

The S&P 500 slipped 0.38% to 1,685.94 after trading as high as 1,698.38 Wednesday morning following evidence that the eurozone economy was rising out of a recession and a series of upbeat earnings reports from companies including Apple (AAPL), Ford (F) and Boeing (BA). The index closed Wednesday's regular session up 149% from the bottom of the Great Recession on March 9, 2009.

Stephen Suttmeier, the New York-based chief equity technical strategist at Bank of America Merrill Lynch put out a note this week showing that he remains on the bullish side on the stock market, predicting a rally into the 1,700 level with rising resistance at 1,710 which, if shattered, could bring the S&P to its next leg higher at 1725 with the possibility of a longer-term move to 1,775. He's seeing short-term support for the S&P at 1,674 to 1,670 and a more important level of support at the index's prior resistance in the 1,654 to 1,650 area.

Meanwhile Craig Johnson, a Minneapolis-based senior technical research analyst at Piper Jaffray this week reiterated his 1,700 objective for this year and 2,000 target for 2014.

Sameer Samana, a St. Louis, Mo.-based international strategist at Wells Fargo Advisors maintains that the S&P 500 is now close to the upper end of his year-end target range of 1,650 to 1,700.

"All told, the improving health of eurozone economies fits my expectation that global economy activity will do well in the second half of the year providing a bullish backdrop for equity prices," Andrew Wilkinson, the New York-based chief economic strategist at Miller Tabak said in a emailed comment. "I think new highs will continue to be a driving theme as 2013 progresses."

The Dow Jones Industrial Average dropped 0.16% to 15,542.24. The tech-heavy Nasdaq was up incrementally at 3,579.60 as heavyweight Apple advanced more than 5% to $440.61 after reporting third-quarter earnings that beat Wall Street expectations.

Roger Shaffer, managing director at HighTower's Shaffer Wealth Management, said in a phone interview that the current dip in the S&P 500 appears to be a leveling off from all the volatility it has experienced related to Federal Reserve announcements and earnings season.

Facebook (FB - Get Report) edged up 1.5% to $26.51 during the regular trading session. The social networking giant is expected to post after Wednesday's closing bell second-quarter earnings of 14 cents a share on revenue of $1.62 billion. Investors will be focused Wednesday on signs that Facebook can keep growing advertising revenue, especially on mobile devices.

Broadcom (BRCM - Get Report) suffered the biggest drop in the S&P, tumbling 15.1% to $27.01after the company reported swinging to a net loss in the second quarter driven by the company's acquisition of NetLogic Microsystems. The stock's drop by double digits had earlier triggered the Nasdaq's circuit breaker in early trading.

Electronic Arts (EA - Get Report) was the biggest gaining stock among the S&P 500, jumping 6.7% to $25.41. The video game publisher posted a smaller than expected loss of 40 cents a share as revenue blew past expectations amid digital sales and cost control strength.

Dell (DELL - Get Report) rose 0.23% to $12.91. Private equity giant Silver Lake Partners and Michael Dell are raising their $24.4 billion offer for the company by 10 cents, as the buyout consortium fights activist hedge fund investor Carl Icahn fight for control of the PC-maker.

In the eurozone, a report provided evidence that the region is climbing on of recession. Financial information services company Markit reported Tuesday that its "flash" Eurozone Composite Purchasing Managers' Index based on a very wide survey of companies showed a surprise return to growth in the private sector. The index rose to an 18-month high of 50.4 in July from 48.7 in June. This is the index's first rise above the 50 level dividing growth and contraction since January 2012. The report also showed its preliminary data on the Eurozone Manufacturing PMI rise to a 24-month high at 50.1.

These headlines were offsetting the Markit report about a decline in Chinese manufacturing to an 11-month low in July given that a slowing Chinese economy has largely been a result of sluggish European demand.

In more heartening news, manufacturing growth picked up to four-month high in July according to the Markit Flash U.S. Manufacturing Purchasing Managers' Index released Wednesday.

New home sales rose to a seasonally adjusted annual rate of 497,000 in June from a downwardly revised 459,000 in May as buyers scrambled to take advantage of lower mortgage rates while they lasted. Economists were expecting a rise in June to 482,000.

The benchmark 10-year Treasury was slipping 20/32, raising the yield to 2.585%.

Written by Andrea Tse and Joe Deaux in New York

>To contact the writer of this article, click here: Andrea Tse.>

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