The S&P 500 financials index fell as much as 1 percent, before recovering to trade just 0.11 percent lower. The index has not ended lower for 10 straight sessions. "The news about Morgan Stanley is wearing off. The issues that caused the shortfall in revenue for Morgan Stanley seem to have been self-induced and not necessarily a commentary on what's going on in banking," said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.
Industrial stocks rose 0.67 percent, led by defence contractors Lockheed Martin and Northrop Grumman, after President Donald Trump unveiled a revamped US missile defence strategy.
The trade-sensitive sector was 0.48 percent weaker earlier in the day on fears that the fragile Sino-US trade talks could be torpedoed after US lawmakers introduced bills to ban the sale of US chips or other parts to Huawei Technologies Co and certain other Chinese telecoms firms.
Also helping the market was a 0.60 percent bounce in health stocks. The index has been a laggard this year after having outperformed all major S&P sectors in 2018.
"Stocks have been supported this year by a lot of rebalancing that's going on. There is a ritual in the stock market of buying what was down the most or selling what was up the most the prior year," said John Augustine, chief investment officer for Huntington Private Bank in Cincinnati.
At 12:49 p.m. ET the Dow Jones Industrial Average was down 23.63 points, or 0.10 percent, at 24,183.53, the S&P 500 was up 4.54 points, or 0.17 percent, at 2,620.64 and the Nasdaq Composite was up 12.90 points, or 0.18 percent, at 7,047.59.