Technology shares buoyed the Nasdaq on Wednesday after positive broker comments on Qualcomm, but financial shares' losses held back the Dow and the S&P 500.

Banks were hurt by a broad debt ratings downgrade from Standard & Poor's and uncertainty over the government's extensive proposals for banking-industry reform. The KBW Bank index <.BKX> fell 3.3 percent.

Qualcomm was among the Nasdaq's leaders, up 3.8 percent at $45.09 after Goldman Sachs added the wireless technology supplier's stock to its conviction buy list.

Biotech companies also rose after Celgene Corp said its experimental anti-inflammatory drug was effective in a mid-stage study. Celgene rose 4.2 percent to $44.94.

Analysts said there were no surprises in President Barack Obama's plans to reshape financial regulation but uncertainty remained about the regulations' impact on the financial system and the wider economy.

The reality is the government is going to create more costs for the financial industry and there's uncertainty in terms of what exactly those costs will be, said Rick Campagna, portfolio manager at Provident Investment Council in Pasadena, California.

Because of the extra regulation, you probably end up having less leverage available to some financial institutions which, although (it) is a good thing systematically, creates lower return on equity across the board.

The Dow Jones industrial average <.DJI> fell 7.49 points, or 0.09 percent, to 8,497.18. The Standard & Poor's 500 Index <.SPX> was off 1.26 points, or 0.14 percent, at 910.71. The Nasdaq Composite Index <.IXIC> gained 11.88 points, or 0.66 percent, to 1,808.06.

On the economic front, the closely watched Consumer Price Index, released before the opening bell, showed inflation is still not a worry.

The S&P 500 briefly fell below its 200-day moving average for the first time since the beginning of June but rallied to close above that level, a crucial technical gauge of market strength.

After rising as much as 40 percent from a 12-year low in early March, the U.S. stock market pulled back slightly in recent days as investors questioned hopes for a V-shaped recovery. The S&P 500 is up 34.6 percent from March's closing low.

Healthcare stocks, thought to be a defensive bet against an economic slump, rose as investors reconsidered what an economic recovery could look like. The S&P healthcare index <.GSPA> advanced 2.1 percent.

Cisco Systems gave support to tech shares after its influential Chief Executive John Chambers told CNBC television he has seen business level out in the last few months. Cisco added 0.6 percent to $19.20.

But financials kept broader gains in check after more than a dozen U.S. banks were downgraded by Standard & Poor's. Investors also mulled the implications of financial reform proposals that include closing one bank regulator and creating government watchdogs.

Dow component JPMorgan Chase fell 2.3 percent to

$32.73.

Among decliners outside the banking sector, shares of FedEx , whose delivery services make it a yardstick for economic activity, fell 1.4 percent to $50.70. The company reported a larger quarterly loss and gave an outlook well below Wall Street's estimates for the current period.

Trading volume was modest on the New York Stock Exchange, where about 1.32 billion shares changed hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.55 billion shares traded, above last year's daily average of 2.28 billion.

Decliners outnumbered advancers on the NYSE by 1,732 to 1,264, while on the Nasdaq, the opposite trend prevailed, with 1,390 stocks advancing and 1,260 shares declining.

(Editing by Jan Paschal)

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