U.S. stocks traded lower Wednesday, shaking off an earlier boost from news of a potential merger, as investors eyed oil prices. ( Tweet This )

“I think that the market’s looking at oil and really just waiting for the Fed to make their move next week,” said Sharon Stark, managing director and fixed income strategist at D.A. Davidson.

Stocks came sharply off session highs to trade mostly lower as oil turned negative and tech stocks lagged.

“I’m not giving a lot of credit to this move (in stocks) until we see a higher close. … I think the market is still temporarily trying to unwind. I think there are a lot of questions as far as investors are concerned. How is the market going to react (to the Fed)?” said John Caruso, senior market strategist at RJO Futures.

Oil turned lower after spiking around the U.S. Energy Information Administration report, which showed weekly crude inventories declined. The late Tuesday release of American Petroleum Institute data showed a surprise drawdown in supply, offering the market support amid an ongoing supply glut.

U.S. WTI crude futures and internationally traded Brent futures were both trading about 20 cents lower, as of 12:07 p.m., ET.

The Nasdaq composite fell 1 percent as Apple shed more than 1.5 percent and biotech stocks declined after standing out as advancers Tuesday.

The Dow Jones industrial average dipped into negative territory after briefly adding more than 150 points with DuPont contributing most to gains. Chevron and Exxon Mobil were also among the top advancers, boosted by gains in oil prices. Energy briefly gained 3 percent and materials temporarily surged 4 percent to lead S&P 500 advancers.

Shares of Dow Chemical and DuPont both jumped more than 10 percent after news the two chemical giants are expected to announce a merger by Thursday. The deal was first reported by The Wall Street Journal late Tuesday and will likely be followed by a separation into businesses focusing on agricultural, materials services, and specialty products operations.

“Oil’s moved up this morning, helping the opening and we’re moving higher,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

He noted that between the close of Dec. 1 and Dec. 8, the energy sector lost about 10.4 percent and the S&P 500 fell nearly 1.9 percent. Ex-energy, the S&P 500 is down about 1.2 percent during that time, he said.

“The big story of the day is Dow, DuPont and Yahoo not going through spinoff. That’s not going to move the market (much). The overarching effect of this long slide in commodity prices is Kinder Morgan,” said Art Hogan, chief market strategist at Wunderlich Securities.

Pipeline operator Kinder Morgan late Tuesday cut its quarterly dividend to 12.5 cents a share, down sharply from the current 51 cents a quarter.

Copper and gold producer Freeport-McMoran said it will suspend its common stock dividend, further revise its oil and gas capital spending plans, and curtail copper production “in response to market conditions.” The move comes after a late-August decision to cut spending.

Yahoo confirmed Wednesday it will not spin off its stake in Alibaba. Sources told CNBC late Tuesday that Yahoo would not move forward with the plan. The Internal Revenue Service earlier this year declined to rule on whether the transaction would be tax-free. Shares of Yahoo turned lower in late-morning trade.

European stocks failed to hold attempts at gains, with the STOXX Europe 600 and German DAX ending nearly half a percent lower or more.

“I think the most noteworthy thing is the weakening of the U.S. dollar. The euro is almost at $1.10. That’s keeping a lid on Europe,” said Peter Boockvar, chief market analyst at The Lindsey Group. He noted the market is focused on “Draghi’s action, not his words on Friday.”

U.S. stocks closed sharply lower last Thursday after European Central Bank President Mario Draghi’s on monetary policy fell short of market expectations for greater stimulus. The euro surged to above $1.09 Thursday for its largest one-day gain against the dollar since March 2009.

The euro has continued to hold near those levels despite Draghi’s remarks Friday that “there is no particular limit to how we can deploy any of our tools.”

The euro was above $1.095 in midday trade, with the U.S. dollar index more than half a percent lower at 97.63. The euro hit a high in morning trade of $1.0995, its highest level since early November.

“The crowded trade is still unwinding,” Hogan said.

The dollar shed nearly 1 percent against the yen, pushing it below 122 yen for the first time since Nov. 6. “A close below [the yen’s 100 day moving average] could signal a test of recent trend-line support at 120.01, with a break below 120 likely to grab MAJOR headlines,” Robert Sinche, global strategist at Amherst Pierpont Securities, said in a note.

The major U.S. averages are down more than 1.5 percent for the week so far, after large declines Monday and Tuesday. No major economic news is due until retail sales and the producer price index Friday. Key for markets is the Federal Reserve’s meeting next week when the central bank could raise short-term interest rates for the first time in nearly a decade.

“The SPX continues to back-and-fill near its 200-day moving average, getting ‘wound up’ in a triangle pattern ahead of next week’s Fed meeting. This means we should expect volatility to increase in the days ahead with a strong directional bias, unlike the fickle price action of late,” BTIG Chief Technical Strategist Katie Stockton said in a note. She added that her indicators support an upward breakout and she expects “a year-end rally as positive seasonal influences take hold.”

In data reports Wednesday, U.S. wholesale inventories fell 0.1 percent in October as businesses stepped up efforts to reduce the stockpile of unsold merchandise, suggesting inventories would again be a drag on growth in the fourth quarter, Reuters said. Economists polled by Reuters had forecast wholesale inventories ticking up 0.1 percent in October.

Treasury yields held higher in midday trade, with the 2-year yield near 0.95 percent and the 10-year yield at 2.25 percent. The Treasury is due to auction 10-year notes in the afternoon.

In midday trade, the Dow Jones industrial average slipped 1 point, or 0.01 percent, at 17,567, with Apple leading decliners and DuPont the greatest advancer.

The S&P 500 traded 7 points lower, or 0.34 percent, at 2,056, with information technology leading six sectors lower and materials the greatest advancer.

The Nasdaq composite fell 48 points, or 0.96 percent, at 5,047.

Advancers were a slight step ahead of decliners on the New York Stock Exchange, with an exchange volume of 389 million and a composite volume of 1.9 billion.

Crude oil futures for January delivery gained 56 cents to $38.08 a barrel on the New York Mercantile Exchange. Gold futures for February delivery rose $5.60 to $1,080.90 an ounce as of 9:56 a.m.