US stocks slip as markets await debt resolution

The Dow Jones Industrial Average shed 15.51 points (0.12 per cent) to close at 12,571.91.

The broader S&P 500 slipped 0.89 point (0.07 per cent) to 1,325.84, while the tech-heavy Nasdaq Composite tumbled 12.29 points (0.43 per cent) to close at 2,814.23.

The retreat came a day after Wall Street enjoyed its strongest one-day rally this year, driven by robust earnings from companies like IBM and Coca-Cola.

Wednesday's big winner was Apple, whose shares surged 2.7 per cent after it reported that its second-quarter profit soared to $7.31 billion thanks to booming sales for iPhones and iPads.

In contrast, Internet giant Yahoo! plunged 7.6 per cent after it announced late Tuesday that its second-quarter revenue declined 5.0 per cent from a year ago.

"The US equity markets remain below the flatline in afternoon action as enthusiasm toward progress among Washington lawmakers on a deficit-reduction agreement and Apple Inc?s blowout earnings has waned," analysts from Charles Schwab said in a market commentary,

Traders were closely watching developments in Washington, where US President Barack Obama was set to meet with opposition Republican leaders to seek a compromise solution to the debt-ceiling battle.

The White House has warned that failure to raise the debt limit by August 2 could lead to a US government default, which Obama has characterized as economic "Armageddon".

Europe's debt crisis also hung in the shadows on Wednesday, a day before leaders of the eurozone were set to meet for an emergency summit to discuss ways to avoid a Greek default.

In a positive sign for tech companies seeking to go public, real-estate website Zillow had a strong IPO on Wednesday, with its shares surging 79 per cent to $35.77 on their first day of trading.

Boeing jumped 2.2 per cent after American Airlines announced it was ordering 200 Boeing 737 passenger jets, despite the fact that the airline said it would also buy planes from the company's European archrival, Airbus.

Shares in American parent AMR slipped 0.2 per cent after it posted a second-quarter net loss of $286 million.

Clorox gained 2.4 per cent after billionaire Carl Icahn raised his bid for the household-products company from $76.50 to $80 a share.

Bond prices fell. The yield on the 10-year Treasury rose to 2.93 per cent from 2.89 per cent late Tuesday, while the 30-year bond climbed to 4.26 per cent from 4.20 per cent.

Bond prices and yields move in opposite directions.