An unexpected decline in shares of Apple Inc led U.S. stocks lower on Wednesday, as the tech giant dropped nearly 5 percent in heavy trading.

Investors have been reluctant to take big positions as lawmakers continue to negotiate a deal to avoid a series of spending cuts and tax increases effective next year - known as the "fiscal cliff" - that could push the U.S. economy into recession next year.

Apple shares were down at $546.70 and accounted for more than half of the Nasdaq 100's 1.5 percent selloff. Market participants cited a consultancy's report about the company losing share in the tablet market and reports that margin requirements had been raised by at least one clearing firm.

"It's Apple that is dragging the whole market down for today," said Tim Ghriskey, chief investment officer at Solaris Asset Management.

Later in the day, President Obama will renew his case for tax hikes and call for a smooth increase in the nation's borrowing limit in a speech to the Business Roundtable group of CEOs.

For several weeks, the market has reacted quickly to often-conflicting headlines out of Washington about ongoing budget negotiations, prompting investors to be cautious.

The Dow Jones industrial average was up 0.04 points, or 0.00 percent, at 12,951.82. The Standard & Poor's 500 Index was down 6.02 points, or 0.43 percent, at 1,401.03. The Nasdaq Composite Index was down 32.52 points, or 1.09 percent, at 2,964.17.

Banking shares gained, with the KBX Bank index adding 0.7 percent to 48.16.

Citigroup Inc shares rose 4 percent to $35.64 after saying it will cut 11,000 jobs, or 4 percent of its work force - its first major move to restructure since the departure of former chief executive officer Vikram Pandit.

Bank of America shares hit a new 52-week high, rising more than 3 percent to $10.23.

Shares of Freeport-McMoRan Copper & Gold Inc slumped 13 percent to $32.23. The company said it is acquiring Plains Exploration & Production Co and McMoRan Exploration Co in two separate deals for $9 billion in cash and stock in a major expansion into energy.

But shares of McMoRan Exploration soared 75 percent to $14.81 and Plains Exploration & Production shares also jumped, by 24 percent to $44.59.

Weighing on market sentiment, data showed U.S. private-sector employers added 118,000 jobs in November, shy of economists' expectations.

U.S. factory orders rose for second straight month in October, and the service sector grew in November, separate data showed, but market reaction was muted.

Global shares rose after Chinese Communist Party chief Xi Jinping said the country would maintain its fine-tuning of economic policies in 2013 to ensure stable economic growth. Among his key priorities, Xi listed tax reform, urbanization and allowing the market to play a bigger role in setting resource prices.

(Editing by Bernadette Baum)