Stocks Dip After All-Day Churn

Stocks close slightly down after a disappointing private sector unemployment report and upbeat Fed minutes. Gregg Greenberg recaps the action in The Real Story.
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(Updated with stock prices.)

NEW YORK (

TheStreet

) -- Stocks in New York closed in slightly negative territory Wednesday after much indecision and little reaction to the latest Fed minutes and economic data. Wall Street instead looked ahead to the more highly anticipated unemployment report at the end of the week.

The

Dow Jones Industrial Average

ultimately gave up 29.93 points, or 0.3%, to 9280.67, while the

S&P 500

edged down 3.29 points, or 0.3%, to 994.75. The

Nasdaq Composite

shed 1.82 points, or 0.09%, to 1967.07.

Traders were little swayed in either direction by the minutes from the latest meeting of the Fed's policy-making arm released Wednesday afternoon.

"In their discussion of the economic situation and outlook, meeting participants agreed that the incoming data and anecdotal evidence had strengthened their confidence that the downturn in economic activity was ending and that growth was likely to resume in the second half of the year," according to the minutes. Although, the FOMC said its outlook for the next year and a half was essentially the same as at the time of the June meeting.

Stocks were struggling with direction most of the day after not-as-improved as expected economic data. That comes a day after even positive data couldn't stymie a selloff, fueling speculation on whether the six-month rally has capped and will give way to the pullback many on Wall Street have long called for to no avail. But others still think more forces are at play.

"The sense I have is that desperate investors trailing the market are trying to prey on investor fears as a way to get back in," says Jack Ablin, chief investment officer at Harris Private Bank. "We're going to see a lot of the institutional guys buying the dips, just to try to keep up with the market. Many of them were caught flat-footed with too much cash, and then it's been a rally fueled by companies with stock prices less than $5 which funds typically don't own."

One such source of fear is that September is typically a harsh month for equities. Click below to hear Doug Roberts, chief investment strategist for ChannelCapitalResearch.com discuss the September phenomenon, recent economic data, and also what he calls the government trade.

ADP said Wednesday that there were

298,000 jobs lost

in the private sector in August, worse than the 250,000 expected but an improvement form the 360,000 in July. That report comes ahead of Friday's unemployment reading, the most anticipated data of the week.

Factory orders also fell short of expectations. The Department of Commerce said orders increased 1.3% in July, vs. expectations for a 2.2% uptick after an 0.9% increase the month prior.

Meanwhile, the Department of Labor said productivity increased more than expected, by 6.6%, after a 6.4% increase the month prior.

Outside of economic data, financials, which led Tuesday's declines, were again a focus.

The Mortgage Bankers Association released a proposal Wednesday calling for the government

to dismantle

Fannie Mae

and

Freddie Mac

into several smaller, privately held companies that would issue mortgage securities carrying a government guarantee.

Elsewhere, investors are still curious as to when

Wells Fargo

(WFC) - Get Report

will pay back Troubled Asset Relief Program funds. CEO John Stumpf said Wednesday in an interview with

Bloomberg

that the bank will

pay it back

"shortly." The bank has stood by a plan to pay it back without raising capital. Shares fell just 0.5% to $26.09.

Meanwhile, Federal Deposit Insurance Corp. Chairman Sheila Bair told

CNBC

late Tuesday that commercial loans are "going to be a bigger driver of bank failures towards the end of this year into next year." Eighty-four banks have failed thus far in 2009.

In other news,

BP

(BP) - Get Report

said it made a

"giant" oil discovery

at a well in the deepwater Gulf of Mexico, but an appraisal is needed to determine the size of the discovery and its commercial prospects. BP shares tacked on 4.1%, to $52.52.

Oil

closed

perfectly flat at $68.05 a barrel after data from the Energy Information Administration showed a smaller-than-expected drawdown in crude oil inventories, a decline of about 372,000 barrels vs. expectations for a drawdown of as much as 900,000 barrels.

Stocks overseas were mostly lower. In Europe, Franfurt's Dax and London's FTSE 100 lost 0.1% and 0.04%, respectively. In Asia, the Hang Seng in Hong Kong and Nikkei in Japan gave up 1.8% and 2.4%, respectively.

-- Written by Elizabeth Trotta in New York.