The Dow pulled up just short of posting its longest winning streak ever in New York last night, ending just below the gain line after spending most of the day well in negative territory. Investors looked to lock in profits after five straight rises and 24 positive closes out of the last 27 sessions.
With the Federal Reserve's meeting on interest rate policy looming, investors started off on the back foot, sending indexes lower from the opening bell. Traders took the early weakness as a sign it was time to cash in on some of their recent gains.
But the eventuating weakness, the first in some time, was seen by many as the first buying opportunity in a while, driving stocks back up close to their stating point by the close.
The Federal Reserve’s latest policy meeting is slated for Wednesday, with central bank policymakers widely expected to keep a key short-term interest rate unchanged at 5.25%.
The Dow finished 3.9, or 0.02% lower at 13309.07, the broader S&P 500 gave up 1.76, or 0.11% to 1507.72 and the Nasdaq once again bucked the prevailing trend, this time ending up 0.8, or 0.03% at 2,571.75.
Merger news was once again at the fore, with the world's biggest news and financial data provider, Reuters, this time the subject of the headlines. Shares in the newswire company slipped 1.4% after it confirmed it is considering a merger with rival Thomson, down 3.5%, which would value the Reuters Group at $17.7 billion.
Netherlands-based steel producer Arcelor Mittal dropped 2% on news it is considering the purchase of US-based AK Steel for nearly $4.5 billion. Shares AK Steel surged 8%.
Earnings once again featured as a major driver, but this time acted as a mixed influence on the market, with only some of the releases pleasing investors.
On the upside, Dow component and tech leader Hewlett-Packard picked up 2.5% after it said second-quarter earnings and revenue will top estimates, thanks to strong sales of personal computers and servers.
Helping push the Nasdaq was Web marketing firm Aquantive, whose shares rallied 12% in unusually active trading after reporting higher quarterly earnings that topped estimates.
On the downside, insurance broker Marsh & McLennan, financial advisory firm Lazard and online travel agency Expedia all dropped after they posted results that missed analysts' forecasts. Shares ended down 2.5%, 1% and 2.4% respectively.
After the bell, Cisco Systems fell 2.7% and Walt Disney gave up 1.6% after quarterly results fell short of expectations.
In commodities, NYMEX light crude oil for June delivery gained US79c to US$62.26 a barrel and COMEX gold for June delivery fell US$3 to US$687.40 an ounce.
Stocks also ended lower in London, as investors worldwide battened down the hatches ahead of both US and UK and European rate decisions. Investors looked to snap up profits after closing at a more than 6-1/2 high on the previous session, with losses in the major miners ensuring a subdued result.
UK and European central banks are scheduled to make their rate announcements on Thursday.
A 2.7% drop in index heavyweight BHP Billiton weighed down the market. The world’s largest miner was pressured by speculation that it could join the bidding war for Canada's Alcan.
Elsewhere in the sector, Anglo American dipped 2.1%, Xstrata fell 1.7%, Vedanta Resources shed 2.9% and Russian powerhouse Kazakhmys eased 1.4%.
A weakening oil price took its toil on the energy majors, with BP losing 1.1%, Royal Dutch Shell slipping 1.5%. Both are scheduled to go ex-dividend on tomorrow.
Rate sensitive stocks also paid a price, with Alliance & Leicester, HBOS, Bradford & Bingley, Royal Bank of Scotland and Northern Rock all down between half and one and a half percent.
On the upside, Reuters posted a converse result to its Wall Street performance, with shares up 2.3%, adding to its 25% rally on Friday.
The FTSE 100 finished the day 53.3, or 0.85 lower at 6550.4.
European stocks closed lower Tuesday after recent gains, with cyclical stocks pressured ahead of central bank decisions around the globe. Stocks were hurt by losses across the Atlantic after five consecutive record closes for the Dow industrials amid nervousness about upcoming rate decisions.
Shares in German sportswear maker Adidas surged 7.3% after the group said that the order backlog for both of its main brands grew in the first quarter.
Deutsche Bank shares lost 0.5% after the bank posted a stronger-than-forecast 30% rise in first-quarter net income that was partially boosted by a sell off of equity.
Steelmaking giant Arcelor Mittal lost 2.6% in Paris after a report in the Financial Times that it's considering a bid for steel-tube maker AK Steel. Meanwhile, shares in France's Vallourec declined 0.6%.
In Germany, the DAX 30 dropped 83.49, or 1.1% to 7442.2, while in France, the CAC 40 finished 37.23, or 0.61% to 6034.25.
In Tokyo, markets slipped on profit taking in the wake of the previous session's three-week high close. The Nikkei fell 12.99, or 0.07% to 17,656.84.
In Hong Kong, blue chips slipped with investors booking gains, despite a flurry of activity in the afternoon, as bidding began in a government land auction at a West Kowloon site. The Hang Seng Index dropped 190.29, or 0.91% to 20,706.35.
The Overnight MarketWatch report is provided by SHAW Stockbroking's egoli - simple but informative market news for the everyday investor.
egoli news: A view of the Australian market, from your perspective, as it happens. For more information go to http://www.egoli.com.au/egoli/egolihome.asp.