Stocks end lower

NEW YORK (CNNMoney.com) -- Stocks slipped Wednesday, after a volatile session in which investors mulled record oil prices and a falling U.S. dollar ahead of next week's Federal Reserve policy meeting.

The Dow Jones industrial average (down 16.74 to 13,291.65, Charts) lost a few points, while the broader S&P 500 (up 0.07 to 1,471.56, Charts) index ended little changed. The tech-fueled Nasdaq composite (down 5.40 to 2,592.07, Charts) lost 0.2 percent.

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Treasury prices slipped, boosting the corresponding yields. The dollar fell to an all-time low versus the euro. Oil prices hit a fresh all-time trading high of $80.05 a barrel and gold prices slipped.

Thursday's one economic report of note is on weekly jobless claims. Among stock movers, McDonald's (Charts, Fortune 500) could be on the rise after the fast-food retailer announced late Wednesday that its boosting its annual dividend by 50 percent to $1.50 per share. Shares gained 2.5 percent in extended-hours trading.

Stocks rallied Tuesday on bets that the Federal Reserve will cut a key short-term interest rate by as much as a half-percentage point when it meets next week.

Such bets continued to soothe Wall Streeters Wednesday, but any confidence in the Fed was countered by surging oil prices and a falling U.S. dollar.

Stocks are looking steady at the moment, but volume has been light, with investors taking a wait-and-see attitude ahead of the Fed meeting, said Joseph Saluzzi, co-head of equity trading at Themis Trading.

"You're seeing a lot of quick, intraday moves, with people afraid to make big bets ahead of the Fed," Saluzzi said.

The choppiness is unlikely to disappear any time soon, said David Kelly, managing director and economic advisor for Putnam Investments. "This is very much a one step forward, one step back market right now."

The financial markets have been volatile this summer as investors have mulled how the credit crisis, rise in mortgage defaults and housing market collapse will hit consumer spending and the broader economy.

The weakness in the housing market could push the economy to near-recession levels over the next year, before growth gets back on track in 2009, according to a quarterly forecast released Wednesday by the University of California at Los Angeles.

Treasury Secretary Henry Paulson said Wednesday that the recent market turbulence has not been caused by problems in the "real economy," but because of bad lending practices.

He also said that problems with subprime mortgages will take longer to correct than those in other financial markets because of the impact of so many adjustable rate mortgages being reset to higher levels over the next two years.

Meanwhile, crude oil surged after the government's weekly report showed a surprise drop in crude oil inventories.

U.S. light crude oil for October delivery rose $1.68 to settle at $79.91 a barrel on the New York Mercantile Exchange, briefly hitting an all-time trading high of $80.05 a barrel. However, the record price is still below inflation-adjusted highs hit in the early 1980s, which would be equivalent to at least $95 a barrel today.

Oil prices have advanced about 30 percent in 2007.

Treasury prices fell, raising the yield on the 10-year note to 4.41 percent from 4.37 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell to a record low versus the euro and was little changed against the yen.

COMEX gold for December delivery fell 40 cents to settle at $720.70 an ounce.

In corporate news, Texas Instruments (down $0.60 to $35.12, Charts, Fortune 500) narrowed its earnings and revenue forecast to a range that is roughly in line with analysts' estimates. However, the company's mid-quarter update, issued late Tuesday, following Intel's more upbeat forecast earlier this week, and investors sent TI stock lower.

Amgen (up $1.76 to $55.64, Charts, Fortune 500) rose 3.3 percent in active Nasdaq trade after FDA advisors voted against requiring the company to add information about red blood cell levels to the labels of its anti-anemia drugs. The move was seen as boosting the sales potential for the drugs.

Apple (up $1.36 to $136.85, Charts, Fortune 500) shares rose after UBS lifted its price target on the company, Reuters reported.

Medical device maker Cardica (up $1.35 to $9.99, Charts) rallied almost 15.6 percent after it received European approval for its device that connects blood vessels during heart bypass surgery.

Sirius Satellite Radio (up $0.11 to $3.42, Charts) and XM Satellite Radio (up $0.59 to $14.21, Charts) both rose Wednesday, building on recent gains sparked by hopes that a proposed merger between the two could get regulatory approval. (Full story).

On the downside, a number of large technology stocks declined, including Hewlett-Packard (down $1.11 to $48.76, Charts, Fortune 500) and IBM (down $1.35 to $116.00, Charts, Fortune 500).

Market breadth was negative. On the New York Stock Exchange, losers beat winners by six to five on volume of 1.29 billion shares. On the Nasdaq, decliners beat advancers by almost three to two on volume of 1.92 billion shares.

Treasury prices fell, raising the yield on the 10-year note to 4.41 percent from 4.37 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell to a record low versus the euro and was little changed against the yen.

COMEX gold for December delivery fell 40 cents to settle at $720.70 an ounce.