The Dow moved quickly in and out of negative territory in afternoon trading, with Caterpillar exerting the heaviest weight on the blue-chip average. Caterpillar's stock shed nearly 10 percent to $32.20, after the heavy equipment maker forecast its 2009 profit would drop significantly from 2008, and announced massive job cuts.

Among financial-sector laggards, Regions Financial Corp tumbled 13.7 percent to $4.02 after influential banking analyst Richard Bove said it may slash its dividend by 90 percent.

Concerns over whether banks will need to raise more capital also dampened sentiment.

"It's the same old story," said Steve Goldman, market strategist at Weeden & Co, based in Greenwich, Connecticut.

"There's still the unknown - there will likely be a plan coming out soon on banks, but that brings us to the unknown as well."

The Dow Jones industrial average <.DJI> edged up 9.72 points, or 0.12 percent, at 8,087.28. The Standard & Poor's 500 Index <.SPX> added 2.67 points, or 0.32 percent, to 834.62. The Nasdaq Composite Index <.IXIC> put on 4.58 points, or 0.31 percent, to 1,481.87.

News that Pfizer Inc would buy rival Wyeth for about $68 billion had earlier buoyed overall sentiment, but worries over the deal's benefit to Pfizer weighed on the company's stock, making it one of the Dow's biggest drags.

Pfizer was down 11.9 percent at $15.38, while Wyeth gave up earlier gains to slide 0.9 percent to $43.30.

(Reporting by Leah Schnurr; Editing by Jan Paschal)