After a strong run in the third quarter, investors are now looking for the next catalyst to drive stock prices, said Dan Greenhaus, chief strategist at BTIG. "You need to see a sustained pick-up in economic data and more positive news out of Europe," he said.
The modest gains Wednesday came after payroll processor ADP said the nation gained 162,000 private sector jobs in September. The report is considered a prelude to the government's closely watched monthly jobs data, which is due out this Friday. Investors are hoping to see a rebound in the labor market after last month's grim report.
An index of activity in the service sector of the economy rose for the 33rd month in a row, according to the Institute for Supply Management. In addition, the Mortgage Bankers Association's index, which measures mortgage applications, rose 16.6% for the week ended Sept. 28, up from the prior week's 2.8% increase.
Meanwhile, investors remain focused on Europe, specifically Spain, where there's mounting pressure for the nation to formally request a bailout. Late Tuesday, Spanish Prime Minister Mariano Rajoy said a bailout request was not imminent.
Oil prices fell 3% as weak economic data in China and Europe raised worries about global energy demand. The sell-off weighed on shares big oil companies and commodities producers. Chevron(CVX), Alcoa (AA)and Caterpillar (CAT)were among the worst performing blue chips.
Hewlett-Packard (HPQ)was the worst performer on the Dow. Shares of the PC-maker fell nearly 13% after the company lowered its outlook for the fiscal year that ends in October 2013.
European stocks ended mixed. Britain's FTSE 100 gained 0.3%, while the DAX in Germany rose 0.2% and France's CAC 40 edged 0.2% lower. A survey of purchasing managers in the euro area fell in September, suggesting the region fell back into recession during the third quarter, according to data from Markit.
European Central Bank officials will meet Thursday for their monthly policy meeting in Frankfurt. Analysts do not expect ECB president Mario Draghi to announce any new programs, although he may elaborate on plans to buy government bonds.
Asian markets ended the session mixed, with markets in Shanghai closed for a holiday. The Hang Seng in Hong Kong added 0.1% while Japan's Nikkei lost 0.5%. In China, the official non-manufacturing purchasing managers index for August fell to the lowest level since March 2011.
Companies: Shares of Best Buy (BBY) jumped 5% following reports that founder Richard Schultze and at least four private equity firms have started examining Best Buy's books in advance of a potential $11 billion buyout offer.
Shares of MetroPCS(PCS) fell 10% after it announced plans to merge with Deutsche Telekom's T-Mobile USA.
Family Dollar(FDO) shares gained 4% after the company reported fourth-quarter earnings and sales that were in line with forecasts, and said it planned to open 500 stores next year. But the gains were offset by Family Dollar's lowered guidance for the first quarter.
Shares of agribusiness giant Monsanto(MON) fell 2% after it reported a worse-than-expected quarterly loss.
In its initial public offering, shares LifeLock(LOCK), which provides identity theft protection services, fell nearly 4%.
Apple (AAPL)shares edged higher after the Wall Street Journal reported production had begun on a mini iPad.