NEW YORK, Jan 4: US stocks were stuck in the red on Wednesday as traders showed more caution a day after a sharp in Wall Street rally.

The major indexes opened lower and deepened their losses in morning trade.

The Dow Jones Industrial Average was down 56.68 points (0.46 per cent) to 12,340.70 by 1545 GMT.

The tech-dominated Nasdaq Composite slid 19.87 points (0.75 per cent) to 2,628.85, while the broad S&P 500 shed 8.37 points (0.66 per cent) to 1,268.69.

“The US equity markets are under some pressure in early action, giving back some of yesterday's solid gains, as European equity markets are declining with banking concerns resurfacing to weigh on sentiment,” Charles Schwab analysts said.

Andrea Kramer at Schaeffer's Investment Research said that Europe had once again emerged as a focal point, “as Wall Street eyes rising bond yields in Spain, and preparation for a visit by international debt inspectors in Greece.”

Factory orders rebounded in November following two months of decline, but missed market expectations, rising 1.8 per cent from October on strong aircraft sales, the Commerce Department reported.

Automakers were in focus as the December and full-year sales numbers in the United States rolled in.

General Motors shares slipped 0.9 per cent to $20.87. The biggest US automaker said US sales were up 4.5 per cent in December from a year ago and full-year sales gained 13 percent.

Ford Motor, the number-two automaker, said sales rose 10 per cent in December and 11 per cent from 2010. Ford stock jumped two per cent to $11.35.

Chrysler, majority-owned by Italy's Fiat, marked a strong rebound from bankruptcy in 2009, reporting December sales jumped 37 per cent and soared 26 per cent for the year.

Yahoo! slumped 2.9 per cent to $15.81 after it tapped PayPal executive Scott Thompson as new CEO.

Stocks had racked up robust gains in the first session of the year on Tuesday on positive economic data in the United States, the eurozone and China. The S&P 500 added 1.6 per cent.

The bond market firmed. The yield on the 10-year Treasury fell to 1.95 per cent from 1.96 per cent on Tuesday, while the 30-year yield was unchanged at 2.99 per cent.

Bond prices and yields move in opposite directions.