By Will Horner and Caitlin McCabe

U.S. stocks finished mixed Wednesday as investors retreated from shares of many of the technology companies that have powered markets higher this year.

The Nasdaq Composite tumbled 0.6%, dragged down by technology heavy hitters including Apple and Netflix. The S&P 500 ended little changed.

The Dow Jones Industrial Average, meanwhile, gained 0.3% to post its ninth record close of this year. Earlier in the day, the blue-chip index lost as many as 184 points before reversing course and turning positive.

The U.S. stock market's recent rally has showed signs of cooling this week, even as investors point to reasons for optimism ahead. Investors say they are keeping a close watch on the possibility for more fiscal stimulus out of Washington, as well as the potential for a speedier Covid-19 vaccine rollout.

Fresh economic data has also shown encouraging signs that the U.S. economy is improving. On Wednesday, the latest retail sales report revealed that U.S. shoppers sharply increased their spending in January after three months of decline during the holidays.

Still, those signs of progress weren't enough to assuage investors Wednesday, who remain concerned about lofty stock valuations. Rising inflation expectations also have recently weighed on investors, too, as many begin to price in the consequences of more stimulus and spending.

"We're in the early stages of a business and market cycle, and so the worry is whether it's getting too hot too quickly and whether the [Federal Reserve] will make a move," said Brian Levitt, global market strategist at Invesco. "I think it's incredibly premature."

Investors have been keeping close watch of the yield on the 10-year U.S. Treasury note, which has continued to drift higher after starting the year below 1%. The yield on the benchmark note was 1.297% Wednesday, down from 1.298% Tuesday. Earlier in the day, yields had risen as high as 1.331%.

Even with Wednesday's intraday drop, yields remain significantly higher than they were just a few session ago, which may be causing some investors to reassess their appetite for more risky investments, said Derek Halpenny, head of market research at MUFG Bank. Low bond yields had helped fuel interest in equity markets in recent months, he said.

The climb in yields "has gone a bit further than what the market was expecting," Mr. Halpenny said. "You get to a level where the relative risk-reward becomes slightly less attractive for equities than what you were anticipating, and that can lead to some pause and some repositioning."

Still, some investors say they remain optimistic that stocks will continue to outperform this year, especially amid expectations that monetary policy will likely continue supporting the economy and markets. Last week, Chairman Jerome Powell said that the Fed is unlikely to "even think about withdrawing policy support" by raising rates or reducing bond purchases in the foreseeable future.

Among individual stocks, Verizon Communications rose 5.3% to post the largest gain of the Dow's components, followed by Chevron, which gained 3%. Both stocks surged after Warren Buffett's Berkshire Hathaway said it had bought large stakes in both companies.

Meanwhile, Apple and Netflix were among the technology companies to post losses. Apple lost 1.8%, while Netflix slid 1.1%. Facebook also fell, losing 0.3%.

Corporate earnings season is set to continue, with Pioneer Natural Resources and Chinese tech giant Baidu scheduled to release earnings after markets close.

Strong earnings reports have been a bright spot for investors, helping justify high valuations for stocks, said Dorian Carrell, a portfolio manager at Schroders.

"We are into an earnings recovery at the moment and -- providing there isn't a hiccup with the vaccinations -- the U.S. will continue to do well," said Mr. Carrell.

In commodity markets, Brent crude, the international benchmark for energy markets, rose about 1.6%. Gold prices fell 1.5%.

Overseas, the pan-continental Stoxx Europe 600 edged down 0.7%.

In Asia, the major indexes ended on a mixed note. Japan's Nikkei 225 fell 0.6%. Hong Kong's Hang Seng Index rose 1.1%. Markets in mainland China remained closed for the Lunar New Year holiday.

Write to Will Horner at William.Horner@wsj.com and Caitlin McCabe at caitlin.mccabe@wsj.com

(END) Dow Jones Newswires

02-17-21 1619ET