NEW YORK (Reuters) - Stocks pared losses on Wednesday as financial shares advanced on hopes the Senate would pass a revamped rescue plan that would stabilize the U.S. financial system and loosen up tight credit markets.
An index of bank shares rose 1.7 percent.
The Dow Jones industrial average was down 23.26 points, or 0.21 percent, at 10,827.40. The Standard & Poor's 500 Index was down 5.82 points, or 0.50 percent, at 1,160.54. The Nasdaq Composite Index was down 19.08 points, or 0.91 percent, at 2,072.80.
Earlier, the benchmark S&P 500 fell as much as 2 percent as investors worried how effective a $700 billion bank rescue would be in averting recession for the economy.
Fears were reinforced by a bleak batch of economic data on employment and manufacturing. The cost for banks to borrow dollars over a three month period also rose on Wednesday.
"People are hopeful something will get passed by the Senate and that will put pressure on the House," said Bobby Harrington, head of block trading at UBS in Stamford, Connecticut.
On Tuesday, Wall Street had its best day in six years.
(Reporting by Steven C. Johnson; Editing by Kenneth Barry)
