Stocks Limp Along on Light Volumes

The spate of China data this week includes inflation, industrial production, retail sales and fixed asset investment on Thursday and trade data on Friday.

"China's top authorities two weeks ago reaffirmed that growth remains their highest priority," noted Qinwei Wang, China economist for Capital Economics.

"Local governments are responding by unveiling stimulus plans, which is another reason to expect growth to pick up over the next few quarters. That said, we still expect China's economic recovery to be gradual rather than sharp."

Both the FTSE in London and the DAX in Germany finished flat.

A spate of weak reports came out of Europe Wednesday as the Bank of England reduced its outlook on the U.K.'s economy, the Bank of France warned that the French economy may slide into a shallow recession in the third quarter, Dutch bank ING(ING) reported losses related to its exposure to Spain, Greece's rating outlook was slashed by Standard & Poor's and German industrial production in June declined a bit more than expected.

Earlier Wednesday, Spanish 10-year yields popped above 7%.

"The latest German industrial production data round off what has been a pretty torrid quarter for the euro area," said James Nixon, chief European economist at Societe Generale.

September crude oil futures settled down 32 cents at $93.35 a barrel and December gold futures settled up $3.20 at $1,616 an ounce.

The benchmark 10-year Treasury was rising 5/32, diluting the yield to 1.648%. The greenback was up 0.1%, according to the dollar index.

The Labor Department said before the markets opened that preliminary second-quarter nonfarm productivity rose at a 1.6% annual rate and unit labor costs increased at a 1.7% rate. Economists surveyed by Reuters had expected productivity to rise by 1.3% and unit labor costs to increase by 0.6%.

On the corporate front, Dean Foods(DF) soared 41% after the dairy company reported bigger-than-anticipated quarterly earnings and announced a U.S. initial public offering for its WhiteWave Foods unit.

Priceline.com(PCLN) , the online travel reservation company, provided investors with an underwhelming outlook after Tuesday's close of trading.