Wall Street opened lower on Wednesday after a robust rally in the prior session, as soft demand at an Italian debt auction sparked concerns over the financial health of the Euro zone. The Dow Jones industrial average dropped 70.66 points, or 0.49 per cent, to 14,488.99. The Standard & Poor's 500 Index lost 8.78 points, or 0.56 per cent, to 1,554.99. The Nasdaq Composite Index fell 23.01 points, or 0.71 per cent, to 3,229.47.
On Tuesday, the Dow had climbed more than 100 points to another record close and the S&P 500 came within striking distance of its all-time closing high, as strong data on home prices and manufacturing fed optimism about the economy.
The Dow Jones industrial average initially surpassed its 2007 record closing high on March 5. Since then, the Dow has reached a series of subsequent nominal record highs.
In Tuesday's session, the S&P 500 made yet another attempt at a record, but failed to break above the all-time closing high for the second day this week.
At Tuesday's close, the S&P 500 was only 1.38 points below its lifetime closing high. On Monday, the benchmark index traded just a quarter point below its record closing high, which stands at 1,565.15 set on October 9, 2007, and then retreated as investors sold some equities to cash in on gains in the wake of the news out of Europe.
Data showed US single-family home prices rose in January at the fastest pace in more than six years, while long-lasting US manufactured goods, also known as durable goods orders, shot up in February.
"I think the batch of data was enough to convince investors that the US economy is on the right track," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co, in New York.
"At this point, it's hard to argue that anything will derail the US economy, and that is boosting investors' confidence as they continue to load up on equities."
Still, investors may look for reasons to take profits, with the S&P 500 up nearly 10 per cent so far this year. The rally has lifted the benchmark index near its all-time closing high, which it nearly reached on Monday.
The Dow Jones industrial average rose 111.90 points, or 0.77 per cent, to end at 14,559.65, a record closing high. The Standard & Poor's 500 Index gained 12.08 points, or 0.78 per cent, to finish at 1,563.77. The Nasdaq Composite Index advanced 17.18 points, or 0.53 per cent, to close at 3,252.48.
The semiconductor index climbed 0.9 per cent, buoyed by Intel Corp shares, up 2.9 per cent at $21.77.
The CBOE Volatility Index or VIX, Wall Street's favourite barometer of investor anxiety, fell 7.1 per cent to close at 12.77.
In a sign that growth continues to be slow, sales of new US single-family homes fell more than expected in February, and the latest reading on consumer confidence was weaker than expected.
Shares of homebuilding stocks were mixed. Lennar Corp stock rose 0.4 per cent to $41.72, but Hovnanian Enterprises shares slid 3.1 per cent to $5.87.
But investors remained concerned about the negative implications of a financial rescue plan for Cyprus. They worried that it would serve as a template for other Euro-zone economies requiring bailouts.
Banks in Cyprus will remain closed until Thursday and will then be subject to capital controls to prevent a run on deposits. President Nicos Anastasiades said late on Monday that a ^10-billion ($13 billion) rescue plan approved over the weekend was "painful" but essential to avoid economic meltdown.
"If there's a run on deposits, there may be a selloff (in US stocks), but that could pose an excellent entry point to get into the market and take advantage of this rally," said Todd Schoenberger, managing partner at LandColt Capital, in New York.
In US corporate news, Monsanto Co and DuPont Co settled a legal battle over rights to technology for genetically modified seeds. The companies agreed to drop antitrust and patent lawsuits against each other in U.S. federal court. Monsanto shares rose 4.4 per cent to $103.79. DuPont, a Dow component, shed 0.3 per cent to $48.97.
Netflix Inc was the S&P 500's top percentage gainer, jumping 5.4 per cent to $190.61 after Pacific Crest raised its price target on the stock to $225 from $160, citing prospects for international subscriber growth.
In Tuesday's session, volume was lighter than usual with some market participants absent for the observance of the Jewish holiday of Passover.
Volume was roughly 5.2 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 7 to 3. On the Nasdaq, seven stocks rose for every five that fell.
