The Dow and S&P 500 edged lower on Wednesday due to uncertainty about when Congress might approve a proposed $700 billion financial sector bailout.
Fear that congressional wrangling could delay or weaken the plan to mop up bad mortgage debt from banks' balance sheets kept stocks in check throughout the day.
The Dow and S&P declined for the third consecutive day. However, the Nasdaq held on to slender gains on hopes that technology spending would increase once a version of the bailout plan becomes law.
Federal Reserve Chairman Ben Bernanke urged Joint Economic Committee of Congress to pass the bailout, saying delay would keep lenders from extending credit to households and businesses.
The Dow Jones industrial average was down 29.00 points, or 0.27%, at 10,825.17.
Standard & Poor's 500 Index was down 2.35 points, or 0.2%, at 1,185.87. The Nasdaq Composite Index was up 2.35 points, or 0.11%, at 2,155.68.
About 1.08 billion shares changed hands on the New York Stock Exchange - well below last year's estimated daily average of roughly 1.90 billion.
About 1.81 billion shares were traded on the Nasdaq, also below last year's daily average of 2.17 billion.
Crude oil prices have dipped after the US government reported a sharp drop in consumption.
New York's main contract, light sweet crude for November delivery, fell 88 cents a barrel to close at $US105.73.
Other markets
The FTSEurofirst 300 index of top European shares closed 0.63% lower at 1,101.60 points, falling for the third consecutive session. Mining and energy shares were among the biggest losers.
In Frankfurt, the DAX index ended at 6052.87 points, down 15.66 or 0.26%. In Paris, the CAC-40 index closed at 4114.54 points, down 25.28 or 0.61%.
The Swiss market index closed at 6780.34 points, down 25.19 or 0.37%.
In Britain, the FTSE 100 closed down 40.6 points, or 0.8% at 5,095.6, after losing 1.9% on Tuesday. Trading was thin. The index is down 21% this year to date.
Euro zone government debt rose as weakening business morale in Germany, France and Italy offered more evidence that the region is sinking into recession and could lead the European Central Bank to cut interest rates in the future.
Shares rose in Asia on news of a $US5 billion investment in Goldman Sachs by billionaire Warren Buffett on Tuesday.
The Tokyo Stock Exchange's benchmark Nikkei-225 index rose 24.44 points to end at 12,115.03.
Hong Kong share prices closed 0.5% higher after strong early gains were wiped out by rumours of instability at the Bank of East Asia.
The benchmark Hang Seng Index closed up 89.14 points at 18,961.99. Turnover was light at HK$59.01 billion.
NZ & Australia
The New Zealand sharemarket rose 31 points to close at 3260 on turnover of $87 million on Wednesday.
Telecom was up 4 cents to $2.84, while Fletcher Building was up 9c to $7.39 and Contact Energy slid 10c to $8.50.
Kiwi Income Property Trust was down 4c to $1.18 after announcing that its property portfolio tumbled $51 million in value in the past six months, to just over $2 billion.
Austral Pacific was down 8c to 33c a share after announcing a review of its business.
In the currency markets: at 8.20am on Thursday, the New Zealand dollar was trading at US68.29 cents, 81.84 Australian cents, 36.96 pence, 72.42 yen and 0.4667 euro. The Trade Weighted Index was at 63.94.
The Australian sharemarket also closed higher, with the benchmark S&P/ASX200 index up 58.4 points, or 1.19%, to 4,981.9, while the broader All Ordinaries lifted 50.5 points, or 1.02%, to 5,008.2.
The price of gold in Sydney was $US888.90 per fine ounce, down $US1.80 on Tuesday's close of $US890.70.
