Wall Street found little reason to continue the gains of the previous three sessions overnight amid lukewarm US productivity data and downgrades in economic growth forecasts in Europe.

Investors also were disappointed to hear that Federal Reserve Bank of Dallas President Richard Fisher thinks there's adequate economic stimulus in place, a day after Fed Bank of Boston President Eric Rosengren argued the central bank should do more bond-buying until the economic recovery accelerates.

Fisher disagrees. "We're at the risk of overburdening the central banks," Fisher said in an interview with Bloomberg. "We keep applying what I call monetary Ritalin to the system. We all know there's a risk of over-prescribing."

The world's largest economy keeps producing lacklustre data. American nonfarm productivity increased at a 1.6 per cent annual rate between April and June, according to Labor Department data. While the increase was better than expected, it remains low.


"The pace of productivity growth is relatively soft at the moment. It's hard to add production on a faster pace without adding more workers," Jeremy Lawson, an economist at BNP Paribas in New York, told Reuters.

In late afternoon trading in New York, the Dow Jones Industrial Average edged 0.03 per cent lower, the Standard & Poor's 500 Index slipped 0.10 per cent and the Nasdaq Composite Index fell 0.19 per cent.

While HP raised its third-quarter profit forecast, other corporate news was bleak: Morgan Stanley may close some brokerage offices, McDonald's posted disappointing same-sales figures and AMR's American Airlines pilots have rejected a tentative contract offer.

In Europe, the Stoxx 600 Index finished the session with a 0.2 gain for the day.

Of the 535 companies in western Europe to have reported results this quarter, 52 per cent had per-share profit that missed analyst projections, according to data compiled by Bloomberg. Earnings declined 5.7 per cent in the period.

Greece might face another downgrade in it already low credit rating. Standard & Poor's said yesterday that it revised its outlook on the nation's CCC rating to negative, from stable.

The Bank of England's outlook on the UK economy got a little gloomier. In its quarterly Inflation Report, the central bank said it expects annual growth in gross domestic product of about 2 per cent in two years. That's down from a May estimate of 2.5 per cent.

That doesn't mean the central bank is about to cut interest rates.

"It would damage some financial institutions and it would therefore in all probability have an element at least of being counterproductive, which is precisely why we haven't cut bank rate," Bank of England Governor Mervyn King told reporters in London today.

"If that situation were to change, and it is possible that the impact on the net interest margins of smaller banks and building societies might diminish, then that could be something that could be contemplated."

And the Bank of France forecast the nation's GDP to contract 0.1 per cent in the three months to September. Data on the second quarter are due next week.