Mixed day on Wall Street

Wall Street had a mixed day after the Federal Reserve reported slow but steady regional economic growth, deflating hopes for an interest rate cut that were already dampened by a larger-than-expected producer price index.

Investors' rate worries trumped their optimism about strong earnings in the financial services sector, which earlier in the day helped nudge the Dow Jones industrials above 12,600 for the first time.

The Labour Department said before the market opened that the PPI, an indicator of inflation, rose by 0.9% in December - slower than in November, but faster than the market expected. Later, the Fed reported in its Beige Book of regional economic conditions that the economy is moderating at a steady pace.

Investors believed the reports not only lowered the chances of a rate cut, but also that the Fed might raise rates to curb inflation, a move that could hit consumer spending and hurt corporate profits.

"Inflation may be a worry, and that is job one at the Fed: to control inflation," said Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh.

The PPI figure "makes it more unlikely that easing will happen, and may make it likely for the Fed to raise rates".

Also weighing on stocks was a rebound in oil prices and an outlook from Intel, the world's largest chip maker, that suggested profits in the technology sector might weaken this year.

The Dow fell 5.44, or 0.04%, to 12,577.15, after hitting a new trading high of 12,614.00 earlier in the session and after three straight days of record closes.

Broader stock indicators also slipped. The Standard & Poor's 500 index declined 1.28, or 0.09%, to 1,430.62, and the technology-laden Nasdaq composite index fell 18.36, or 0.74%, to 2,479.42.

Although the indexes were lower, advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where volume came to 1.52 billion shares.