S&P 500, Dow drop for 4th straight session

NEW YORK (MarketWatch) — U.S. stocks ended mostly lower on Wednesday, with the S&P 500 and the Dow Jones Industrial Average extending their losing streak to four straight sessions.

Upbeat economic reports appeared to reinforce worries that later this month the Federal Reserve could start to taper its bond-buying program that has supported equities. The main indexes had all moved into positive territory following a report of progress toward a U.S. budget deal, but those gains faded.

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Many strategists have been expecting a market pullback given recent advances. Last week, the S&P 500 achieved its eight straight weekly gain, and the benchmark index remains up 25.7% in the year to date.

"The market has done exceptionally well and was bound to pull back sooner or later," said Peter Cardillo, chief market economist at Rockwell Global Capital.

Read a blow-by-blow of the market day in MarketWatch's stock market live blog.

The S&P 500 (SPX)  dipped 2.34 points, or 0.1%, to close at 1,792.81, retreating further below the milestone level of 1,800. The Dow Jones Industrial Average (DJIA)  fell 24.85 points, or 0.2%, to end at 15,889.77, staying below its own big round number of 16,000.

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Polya Lesova takes a look at which stocks traders will be watching during market action, including J.C. Penney, Express, and OmniVision Technologies. Photo: Getty Images.

The Nasdaq Composite (COMP)  bucked the negative trend, rising 0.80 point to finish at 4,038. The tech-heavy index snapped a two-day losing streak and held above the 4,000 level.

On Tuesday, stocks lost ground on uncertainty over when the Fed will begin to pare its bond-buying program and on jitters about whether the market rally is overextended.

Today's market-moving news: Private-sector hiring in November was the hottest in a year, as 215,000 jobs were added, according to a report from Automatic Data Processing. In addition, a new-home-sales report beat forecasts, and the Fed's Beige Book report was mostly encouraging, but a services gauge missed expectations. Upbeat economic data can weigh on equities if it reinforces worries the Fed could move as early as December to scale back its bond-buying program, even though an improving economy generally helps the market over the longer run. Meanwhile, Bloomberg News reported Wednesday that U.S. budget negotiators are near a deal in which Democrats would accept fresh revenue from user fees and Republicans would agree to more federal spending, steps that could avoid another government shutdown next year.

Today's movers & shakers: CF Industries Holdings Inc. shares (CF)  rallied 10.7% after the fertilizer maker indicated it may return more cash to shareholders and RBC Capital Markets started coverage with a sector perform rating. Express Inc. (EXPR)  tumbled 23% after the clothing retailer cut its full-year outlook. Hewlett-Packard Co. (HPQ)  rose 2.3% after a positive Morgan Stanley report. See: Movers & Shakers column.

The buzz: After a historic bull-market run, a notable group of analysts is warning that all of this could be a bubble that is about to pop, according to John Nyaradi, a contributor to MarketWatch's Trading Deck. Another Trading Deck contributor, Kevin Marder, says it's not "time to run for the hills," but it is time to be "buying selectively."

Other markets: Japan's Nikkei 225 (JP:NIK) dropped 2.2% as the yen rebounded against the dollar. European stocks closed lower. Oil and gold both advanced.