Wall Street Struggles to Find Direction

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Stocks floundered in afternoon action as traders mulled a selloff in energy markets, and weighed positions ahead of looming eurozone events over the next two days.

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Today's Markets

As of 3:30 p.m. ET, the Dow Jones Industrial Average rose 47.8 points, or 0.4%, to 12,199, the S&P 500 gained 1.1 points, or 0.09%, to 1,259 and the Nasdaq Composite dipped 4.4 points, or 0.16%, to 2,645.

As a result of weakness in futures markets, energy shares like Schlumberger (NYSE:SLB) took some of the heaviest selling on the day. U.S. government bonds prices were up, which pushed yields lower.  The benchmark 10-year Treasury note yields 2.063% from 2.093%.

Energy markets came under pressure after fresh data from the Energy Department showed an unexpected increase in crude oil inventories, and a much larger-than-expected surge in gasoline stocks. Generally, unexpectedly high supply is seen as a bearish indicator, and puts negative pressure on prices.

The benchmark crude oil contract traded in New York slipped 78 cents, or 0.78%, to $100.49 a barrel.  Wholesale RBOB gasoline tumbled 6 cents, or 2.2%, to $2.59 a gallon.

Europe has emerged as the central theme of the week, with the key meeting of policymakers now looming just two days away, and little economic data slated for release.

People who closely monitor the situation in Europe warn that such summits have disappointed investors and roiled markets in the past. Indeed, a German official said Wednesday the country doesn't expect all 27 European Union nations to agree to treaty changes that would force closer fiscal ties, according to multiple media reports.  However, in a separate release, the governments of Germany and France, Europe's biggest economic players, noted that if the entire EU doesn't agree to the changes, they will push the 17-member euro area to support the pact.

"This is the one chance [European leaders] have to save the single currency," Peter Dixon, global equities economist at Commerzbank, said in an interview with FOX Business.

A report by the Financial Times on Tuesday afternoon that the eurozone may be planning on doubling the firepower of its rescue facility was taken a good sign, however.

"Our expectations remain low" that a solution will be drafted that prompts the European Central Bank to embark on a balance sheet expansion that provides "a clear path towards resolving the debt crisis," analysts at Nomura wrote in a note to clients on Wednesday.

To that end, traders are also expected to pay close attention to an ECB meeting on Thursday to see what, if any, measures the central bank plans on taking to ease the crisis.  Last week, the ECB, the Federal Reserve and several other global central banks unveiled a united plan to ease conditions in the money markets.  The move sparked a massive rally, but many economists caution it may fight the symptoms, and not the actual sickness.

Banks based in Europe, such as Lloyds (NYSE:LYG), UBS (NYSE:UBS) and Royal Bank of Scotland (NYSE:RBS) were slammed on the worries. European blue chips fell 0.49%, while the euro dropped 0.07% to $1.3389.  The U.S. dollar climbed 0.16% against a basket of six world currencies.

In metals, gold rose $1.70, or 0.09%, to $1,733 a troy ounce.

On the economic front, a report from the Federal Reserve on consumer borrowing across the U.S. is on tap for 3:00 p.m. ET.

Corporate News

AT&T (NYSE:T) said it expects record smartphone sales for the fourth quarter, already selling 4 million in the first two months of the period. The telecom also said it is still pursuing its acquisition of T-Mobile USA from Deutsche Telekom.

Foreign Markets

European blue chips fell 0.49%, the English FTSE 100 dipped 0.38% to 5,548, and the German DAX slumped 0.52% to 5,998.

In Asia, the Japanese Nikkei 225 rallied 1.7% to 8,722 and the Chinese Hang Seng jumped 1.6% to 19,241.

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