(AP) Stocks drifted lower on Wall Street as the latest round of earnings reports failed to give investors an impetus to push the market's recent rally forward.
The Dow Jones industrial average fell 35 points to 13,973 as of 1:43 p.m. EST Wednesday. The Standard & Poor's 500 dropped four points to 1,507. The Nasdaq composite was 12 points lower at 3,160.
Time Warner rose $2.19 to $52.14 after the company said its net income grew 51 percent in the last three months of 2012 even as revenue was largely unchanged. Marathon Oil Corp. fell 66 cents to $34.06 after its fourth-quarter net income fell 41 percent on higher exploration costs and taxes.
Stocks are consolidating their gains after surging since the start of the year. The Dow closed above 14,000 for the first time since December 2007 Friday and had its best January in almost two decades. The index is up 6.4 percent this year, and the broader S&P 500 is 5.7 percent higher.
There's no question that we need to take a pause and let reality catch up, said Jim Russell, an investment director at U.S. Bank.
The rally started when lawmakers reached a last-minute deal to avoid the fiscal cliff, a series of steep tax increases and spending cuts that would have kicked in at the beginning of the year. The gains continued on optimism that the housing market recovery is gaining momentum and that the job market is healing.
While the budget deal reached in January dealt with tax increases, it didn't tackle spending cuts.
Automatic spending cuts, which would hit everything from defense spending to popular benefit programs, were scheduled to take effect Jan. 1, but were postponed till March 1. Russell says stocks will be unlikely to surge ahead while talks heat up in Washington over the spending cuts, which are also referred to as sequestration.
More than half of the companies in the S&P 500 have now reported earnings for the fourth quarter and analysts are expecting earnings for the period to rise by 6 percent, according to data from S&P Capital IQ. That puts earnings growth on track to increase for the third straight quarter after slowing to 0.81 percent in the second quarter of 2012.
As investors have become more comfortable holding riskier assets like stocks, they have cut their holdings in defensive investments like U.S. government bonds, sending yields on those bonds higher.
The yield on the 10-year Treasury note, which moves inversely to its price, has risen more than 20 basis points since the start of the year and is trading close to its highest level since April. The yield fell 3 basis point to 1.97 percent Wednesday.
Among other stocks making big moves:
Ralph Lauren surged $11.23, or 6.8 percent, to $176.10 after the designer clothing company posted a 27 percent increase in income. The company is reporting strong spending among its affluent shoppers in the U.S. and improving trends in Europe.
Walt Disney rose 61 cents to $54.90 after the company posted fiscal first-quarter profits that exceeded analysts' expectations. The entertainment giant's stock rose to a record $55.50, boosted by optimism about the earnings potential of its networks, movies and theme parks.
Boise Cascade, a wood products and building materials company, jumped $5.02, or 23.9 percent, to $26.01 on its first day of trading.
Aflac fell $2.58 to $51.40 after the insurer reported its fourth quarter earnings late Tuesday. RBC Capital Markets cut their forecast for the company's 2013 earnings to reflect the impact of a weaker Japanese yen. Aflac earns a significant portion of its revenues from in Japan.