NEW YORK (CNNMoney.com) -- Bank shares led a late-session selloff Tuesday, breaking Wall Street's four-session win streak, as investors mulled mixed reports on inflation and manufacturing and opted to step back.
The first day of the Federal Reserve's two-day policy meeting and a stronger dollar were also in focus.
Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Travelers (TRV, Fortune 500) were among the big financial shares dragging on the Dow. IBM (IBM, Fortune 500) and Procter & Gamble (PG, Fortune 500) were the Dow's other big losers.
Stocks gained Monday, with the Dow and S&P 500 ending at the highest levels since October 2008 and the Nasdaq closing at the highest point since September 2008. The advance came after Citigroup (C, Fortune 500) said it will repay its government bailout funds and Dubai said it received $10 billion to cover its debt, easing default worries.
The weak dollar also helped Monday, lifting commodity shares and the stocks of companies that do a lot of business overseas. But the dollar gained Tuesday as concerns about debt-ridden Greece caused investors to pull money out of the euro and put it in the dollar, pressuring stocks.
Stocks rallied for more than nine months off the March lows, with the S&P 500 having gained nearly 65% as of Monday's close. But in the last couple of weeks the progression has been much slower and the trading volume much lighter.
"I think money has already been unwound in both hedge funds and mutual funds to lock in gains for the year, while at the same time, people remain skeptical enough of the rally that they continue to hoard cash," said Hank Smith, chief investment officer at Haverford Investments.
This push and pull is likely to keep stocks pretty rangebound for the time being, he said.
Economy: Wholesale prices rose more than expected last month, the Commerce Department said Tuesday morning.
The Producer Price Index (PPI) rose 1.8% in November after rising 0.3% previously. Economists surveyed by Briefing.com thought it would climb 0.8%. The so-called core PPI, which strips out food and energy costs, rose 0.5% versus forecasts for an increase of 0.2%. Core PPI was up 0.3% in the previous month.
The Empire Manufacturing index, a measure of manufacturing in the New York area, slumped to 2.55 in December from 23.51 in November, missing forecasts for a rise to 24.
In other manufacturing news, the Federal Reserve said November capacity utilization rose to 71.3% from 70.6% in October. Economists thought it would rise to 71.1%.
Industrial production rose 0.8% in November after holding steady in October. Economists thought it would climb 0.5%.
Federal Reserve: The last central bank policy meeting of the year began Tuesday with a decision on interest rates due Wednesday.
The central bankers are widely expected to hold the fed funds rate, a key overnight bank lending rate, unchanged at historic lows near zero, where the rate has stood for a year. But the policy statement could provide hints as to when the Federal Reserve plans to raise interest rates, either next year or in 2011.
The Federal Reserve has kept rates low and pumped trillions of dollars into the economy over the last year in an effort to offset the impact of the worst recession since the 1930s.
Company news: Wells Fargo (WFC, Fortune 500) said it sold $10.65 billion in stock Tuesday to help pay back $25 billion in government bailout money, adding to the list of institutions that are looking to give back funds provided to them during the financial crisis.
General Motors said it will pay off a $6.7 billion federal loan by June, ahead of its deadline for repayment under terms of the bailout.
World markets: In Europe, Britain's FTSE 100 fell 0.6%, while Germany's DAX and France's CAC-40 ended modestly higher. Asian markets retreated, with Japan's Nikkei down 0.2%.
Commodities: COMEX gold for February delivery fell 80 cents to settle at $1,123 an ounce. Gold closed at an all-time high of $1,218.30 an ounce earlier this month.
U.S. light crude oil for January delivery rose $1.18 to settle at $70.69 a barrel on the New York Mercantile Exchange.
Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.6% from 3.55% late Monday. Treasury prices and yields move in opposite directions.
Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 1.18 billion shares. On the Nasdaq, decliners topped advancers eight to five on volume of 1.95 billion shares.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.80%||3.79%|
|15 yr fixed||3.02%||3.01%|
|30 yr refi||3.78%||3.76%|
|15 yr refi||3.03%||2.99%|
Today's featured rates:
On Thursday, the Federal Reserve will release the results of round one of its annual "stress test," a yearly exam to determine whether banks can weather a severe recession. More
President Trump will meet Thursday with the heads of Verizo, AT&, Sprin and other companies, according to a White House official. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
It's not just lower earners who find college unaffordable. New data reveals that wealthier families struggle as well. More