On Wednesday, the Dow Jones industrial average (INDU) lost 19 points to end 0.2% lower at 11,457.47. The S&P 500 (SPX) shed 6 points, or 0.5%, and the Nasdaq (COMP) fell 11 points, or 0.4%.
Unless there's some major news to drive investors to the sidelines, it looks like all three major indexes will see double-digit percentage gains for the year. In Wednesday's session, investors weighed worries about a possible Spain downgrade with relatively upbeat U.S. inflation data.
"If news like [Spain] had been a surprise, we'd have seen the Dow off by 1% or so," said Paul Radeke, vice president at KDV Wealth Management. "But everyone knows [Spain] was having trouble with their debt markets. People are looking to the domestic data."
Moody's said it might downgrade Spain's local and foreign currency government bond ratings, citing high refinancing needs in 2011 among other issues. That sent the IBEX, Spain's main stock index, down about 1.4%.
Investors are also looking for Congress to extend the Bush-era tax cuts. The Senate approved the controversial $858 billion tax package Wednesday, despite a series of objections from both the left and the right. The measure, which passed 81-19, now advances to the House of Representatives.
Investors were focusing on the main U.S. inflation gauge. The consumer price index ticked up slightly in November, and right now investors see "a little bit of inflation as better than any deflation," Radeke said.
Peter Boockvar, equity strategist at Miller Tabak & Co., said investors were waiting to see if the recent upbeat reports will continue.
"Investors are hoping this goodwill carries into 2011," he said. "But no one knows what's going to happen over the next two weeks."
The dollar gained against the euro, the Japanese yen and the British pound.
Oil for January delivery gained 34 cents to settle at $88.62 a barrel.
Gold futures for February delivery fell $18.10 to settle at $1,386.20 an ounce.
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