NEW YORK (AP) -- After an early slide, U.S. stocks clawed back much of the ground they lost and ended slightly lower Wednesday. Banks climbed but retailers, homebuilders and smaller companies fell.
Stocks slumped in morning trading as homebuilders and retailers took sharp losses after the Commerce Department said construction of new homes dropped in September. Technology companies fell as IBM suffered its biggest loss in five and a half years after it reported weak sales. Stocks were coming off their biggest gain in more than six months.
Bond prices fell, sending yields higher, after the Federal Reserve said some of its policymakers argued in their latest meeting that the central bank should raise rates to a level that slows economic growth slightly. After years of record low rates following the financial crisis, the fact that some policymakers are talking about eventually using them to slow the economy is a big change.
Jeremy Zirin, head of investment strategy for UBS' global wealth management business, said the Fed won't raise rates to those levels unless there is clear evidence inflation has increased. But he said it makes sense for investors to be wary.
"Overly restrictive monetary policy is a risk to the bull market," he said. "It would be a mistake for (the Fed) to raise rates in the absence of inflation beyond their target, and it's exceedingly unlikely to do so."
The S&P 500 index fell 0.71 points to 2,809.21. The Dow Jones Industrial Average slumped 91.74 points, or 0.4 percent, to 25,706.68. It lost as much as 319 points Wednesday morning before briefly turning higher.
The Nasdaq composite slid 2.79 points to 7,642.70. The Russell 2000 index of smaller-company stocks skidded 7.23 points, or 0.5 percent, to 1,589.60.
Stock trading has been erratic recently. Earlier this month the benchmark S&P 500 index went through a six-day losing streak that included huge drops last Wednesday and Thursday. Then on Friday the S&P 500 jumped 1.4 percent, its biggest rally in three months, fell on Monday, and surged 2.1 percent Tuesday. Trading had been steady from late June to early October.
The Federal Reserve released minutes from its meeting in late September, when it raised interest rates for the third time this year. A few participants believed that the Fed's key interest rate would eventually need to "become modestly restrictive" to make sure inflation doesn't climb too high. Other officials felt the Fed shouldn't take that step unless there are signs the economy is overheating and inflation is rising quickly.
Bond prices sank. The yield on the 10-year Treasury note rose to 3.19 percent from 3.15 percent.
U.S. home construction fell 5.3 percent in September, according to the Commerce Department. The pace of homebuilding has slowed since May, and the report is the latest sign that the combination of rising home values and increasing mortgage rates may be weighing on the market.
Lennar gave up 2.3 percent to $43.08 and PulteGroup shed 3.4 percent to $22.82. Among retailers, Home Depot fell 4.3 percent to $185.17 while Target lost 1.6 percent to $84.42 and Macy's dipped 5 percent to $31.84.
Some investors worried that a weaker housing market is a bad sign for the economy. Zirin, of UBS, said the housing market should keep getting stronger as long as employment is high and wages are rising, but investors aren't sure what is ahead for the economy or stocks.
"When you get into the latter stages of a bull market or the economic expansion, investors get more nervous about the latter stages turning into the end of the cycle," he said. "They start looking for any signals that would lead them to believe that a downturn is imminent."
Insurer Prudential rose 1.9 percent to $99.70 after regulators lifted the strict government oversight that was imposed on the company after the 2008-09 financial crisis. Prudential was deemed "systemically important," which meant it was subject to special restrictions because of its importance to the financial system. It was the last company still carrying that label.
IBM sank 7.6 percent to $134.05 after its sales in the third quarter fell short of analysts' estimates.
The price of U.S. crude oil dropped 3 percent to $69.75 a barrel in New York, its first close below $70 a barrel in a month, after the U.S. government said energy stockpiles jumped last week. Brent crude, the international standard, fell 1.7 percent to $80.05 a barrel in London.
Wholesale gasoline lost 3 percent to $1.92 a gallon and heating oil fell 1.2 percent to $2.31 a gallon. Natural gas jumped 2.5 percent to $3.32 per 1,000 cubic feet.
Netflix added 5.3 percent to $364.70 after the streaming video company said it picked up 7 million subscribers in the third quarter, a total that was above Netflix's own projections as well as analyst forecasts.
The stock set a record high in early July, but a week later, Netflix announced disappointing subscriber totals and gave a weak forecast and its stock tumbled. It is still about 13 percent from its highest price.
The dollar rose to 112.49 yen from 112.18 yen. The euro fell to $1.1507 from $1.1578.
Gold slipped 0.3 percent to $1,227.40 an ounce. Silver lost 0.3 percent to $14.66 an ounce. Copper fell 0.1 percent to $2.78 a pound.
Germany's DAX and the French CAC 40 both fell 0.5 percent. In Britain, the FTSE slipped 0.1 percent.
Japan's benchmark Nikkei 225 jumped 1.3 percent and the Kospi in South Korea advanced 1 percent. Markets in Hong Kong were closed for a holiday.