U.S. Stocks Edge Lower As Chance Of Monetary Stimulus Diminishes

07/12/2012 03:10 pm ET | Updated Sep 11, 2012

* Tech shares weak after Infosys cuts sales forecast

* P&G and Merck support Dow industrials

* Support tested on Dow, S&P 500

* Dow off 0.04 pct, S&P off 0.3 pct, Nasdaq off 0.7 pct

By Caroline Valetkevitch

NEW YORK, July 12 (Reuters) - U.S. stocks edged lower on Thursday, led by technology shares, while diminished chances of monetary stimulus from major central banks prompted investors to shy away from risky assets.

The Dow briefly moved into positive territory in sync with Procter & Gamble's advance, with the blue-chip average bouncing off technical support at 12,500, analysts said. The S&P 500 earlier traded below its 50-day moving average at 1,334.

"We tested (1,334) and bounced, but the flavor of the market is still somewhat tenuous, given the testing of these technical support levels and also the strength in the 10-year bond," said

Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.

The benchmark 10-year U.S. Treasury note was up 11/32 in price, with the yield at 1.482 percent.

The Dow pared most of its loss, getting a lift from the shares of Procter & Gamble - up 4.6 percent at $64.22 - after a source said activist investor William Ackman appears to be building a stake in the U.S. household products company. Merck & Co. shares also bolstered the Dow. Merck's stock rose 4.1 percent to $42.91 after a pivotal trial of Merck's experimental osteoporosis drug odanacatib has shown that it reduces the risk of fracture.

But overall, market sentiment was weak, especially after the lack of any monetary easing by the Bank of Japan on Thursday, and few clues in the minutes from the Federal Reserve's June policy meeting, released on Wednesday. The lack of policy moves suggested major central banks were still cautious about the need for further easing.

The Dow Jones industrial average was down 5.56 points, or 0.04 percent, at 12,598.97. The Standard & Poor's 500 Index was down 4.32 points, or 0.32 percent, at 1,337.13. The Nasdaq Composite Index was down 18.84 points, or 0.65 percent, at 2,869.14.

Technology shares have been among the worst performers recently, bogged down by profit warnings from companies such as Advanced Micro Devices Inc and Applied Materials Inc . For the month, the S&P technology sector is down 4 percent and the PHLX semiconductor sector is off 8.7 percent.

U.S.-listed shares of Infosys Ltd tumbled 11.1 percent to $38.80, after earlier dropping to an all-time low of $38.12. The Indian IT heavyweight cut its sales forecast more than expected as technology spending was hurt by global economic uncertainty.