NEW YORK?US stocks ended flat Wednesday as the Federal Reserve reported a modest economic recovery on improvement in consumer spending and a bleak labor market outlook.

The Dow Jones Industrial Average was down 9.22 points (0.09 percent) at the close to 10,396.76, rolling back two days of rises on a clutch of mergers and acquisitions.

The Nasdaq composite was down 0.11 points, a fraction of a percent, to 2,280.68 while the broad-market Standard & Poor's 500 index added 0.48 points (0.04 percent) to 1,118.79.

The publication of the Fed's Beige Book report dominated Wednesday trade, with the central bank indicating "economic conditions continued to expand" in the country although severe snowstorms in early February "held back activity" in several areas.

Among sectors that saw improvement were services, which accounts for more than two-thirds of US economic activity, and manufacturing.

"Despite the positive start to the day's trading, stocks sagged dramatically into the red in afternoon action," said Elizabeth Harrow of Schaeffers Investment Research.

Earlier, US private unemployment indicators set a mildly upbeat tone, showing the private sector in February shed the smallest number of jobs in two years, matching expectations.

"The ADP Employment Change for February didn't rock the... boat as the estimated 20,000 decline in private payrolls was in line with the consensus estimate," according to Patrick O'Hare of Briefing.com

Non-farm private payrolls fell 20,000 in February from revised January job losses of 60,000, payrolls firm ADP said.

That data was followed by good news from the US service sector, which posted stronger than expected growth in February.

The Institute of Supply Management said its non-manufacturing purchasing managers index (PMI) registered a seasonally adjusted 53.0 percent in February, surging past the consensus forecast of 51.0 percent.

Any number above 50 percent indicates growth.

In individual stocks, software firm Novell raced ahead of the pack, its price surging around 28 percent after a takeover offer by Elliott Associates, a private-equity firm.

Major banks wiped out earlier gains, with the Bank of America sliding 0.49 percent to $16.37 and JPMorgan Chase shedding 0.22 percent at $41.53.

Heavy machinery firm Caterpillar also saw its gains rolled back, but still crossed the finish line with a 0.72 percent advance to $58.57, while General Electric stock rose 0.82 percent to $16.03.

Losers included pharmaceuticals giant Pfizer, which fell 1.59 percent to $17.32 on concerns about the failure of its Alzheimer's treatment drug Dimebon in clinical trials.

The bond market slipped slightly. The yield on the 10-year US Treasury bond was up 3.625 percent from 3.614 percent Tuesday while that on the 30-year bond rose to 4.586 from 4.599 percent.