Stocks slipped on Wednesday on news of a surprising contraction in an index of Midwest business activity, but losses were limited by a bounce in technology bellwethers like Cisco Systems Inc at the end of a strong quarter.

The top drags in Wednesday's session were some of the quarter's best performers, including industrials and banks.

The Institute for Supply Management-Chicago's business barometer unexpectedly fell to 46.1 in September, a level that indicates contraction in the regional economy.

Typical of quarter-end action, trading was choppy and volume light.

Indexes initially fell as much as 1 percent but then briefly turned positive by mid-afternoon, thanks to gains in the shares of such tech bellwethers as Cisco Systems Inc and International Business Machines Corp .

The Chicago PMI kind of scared people, given how much below expectations it was and that turned the market south, said Owen Fitzpatrick, head of U.S. Equity Group at Deutsche Bank Private Wealth Management in New York.

In general, even though economic numbers in the last two or three weeks have been mixed just like today, I think we're still headed toward an economic recovery.

The Dow Jones industrial average <.DJI> fell 58.94 points, or 0.60 percent, to 9,683.26. The Standard & Poor's 500 Index <.SPX> lost 6.79 points, or 0.64 percent, to 1,053.82. The Nasdaq Composite Index <.IXIC> shed 6.56 points, or 0.31 percent, to 2,117.48.

The Chicago PMI report added to the recent string of some surprisingly weak economic indicators, including Tuesday's disappointing report on September consumer confidence.

It also eclipsed a Commerce Department report that showed the economy, measured by GDP, contracted more slowly than initially thought in the second quarter.

Even so, the benchmark S&P 500 stayed on course to end the quarter and September, a traditionally sour month for stocks, on a higher note.

The S&P 500 is up 14.6 percent for the third quarter, which ends Wednesday. For 2009, the S&P is up 16.7 percent and from a 12-year closing low in early March, it's up about 55.8 percent.

(Editing by Jan Paschal)

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