Wall Street flat on lack of catalysts, options expiration

NEW YORK (Reuters) - Stocks were little changed on Wednesday for the third day on low volume and with few catalysts to give investors direction.

In addition, the S&P 500's sideways trading around 1,400 was likely to continue through the end of the week when monthly options expire. Heavy open interest in the 1,400 level suggests the index may be pinned at that level through expiration on Friday.

"I think we are facing technical resistance at 1,405 (on the S&P 500) which is the level of closing highs in early May. We haven't been at that level since, and until we have a catalyst to move significantly above this, the market is likely to consolidate," said Randy Frederick, managing director of active trading & derivatives at Charles Schwab.

Despite incremental gains, stocks have basically been little changed for more than a week with the S&P 500 hovering close to a four-year high. Light volumes and a lack of news from Europe have also contributed to the inertia.

The Dow Jones industrial average was down 4.84 points, or 0.04 percent, at 13,167.30. The Standard & Poor's 500 Index was up 1.26 points, or 0.09 percent, at 1,405.19. The Nasdaq Composite Index was up 9.11 points, or 0.30 percent, at 3,026.09.

In the options market, both August call and put options on the S&P 500 are clustered around 1,400, meaning market-makers could pin the index at the level to maintain a market neutral position and see most of those options expire worthless on Friday.

"At 1,400 there could be the potential for a pinning action where those options ultimately expire worthless," said Todd Salamone, vice president of research at Schaeffer's Investment Research.

In economic data, U.S. industrial output expanded 0.6 percent last month, the fastest pace since April. Manufacturing notched another solid advance, hinting at underlying resilience in an economy that has struggled to establish momentum.

The New York Fed's general business conditions index for August missed expectations and contracted for the first time since October 2011. Meanwhile, Labor Department data showed consumer prices were flat in July for a second straight month and the year-over-year increase was the smallest since November 2010.

Shares of Deere & Co lost 5.8 percent to $75.48 after the world's largest agricultural equipment maker reported a lower-than-expected quarterly profit on Wednesday, citing weak sales in China, India and other emerging markets. Rival Caterpillar Inc slipped 0.4 percent to $87.49 as the biggest drag on the Dow.

Staples Inc slumped 16 percent to $11.32 as the worst performer on the index after the office supply chain reported lower-than-expected quarterly revenue on weak demand in North America, Europe and Australia, and forecast flat sales for the fiscal year.

The S&P 500 rallied early in August and reached highs not seen since early May in anticipation that central banks in the United States and Europe zone will take action to stimulate their respective economies in September.

But the momentum has waned. The benchmark S&P has been unable to muster a move of more than 0.22 percent in either direction over the past five sessions. Volume has been among the lightest of the year so far.

Data from the National Association of Home Builders showed homebuilder sentiment rose in August to 37, its highest level in more than five years, and above the 35 in July. The PHLX housing sector index fell 0.6 percent after gaining earlier.

(Reporting By Angela Moon; Editing by Kenneth Barry)