The nation's service sector expanded more than expected in February but rising fuel costs dampened investor enthusiasm. The markets traded lower during the midday with the Dow slipping 23 points to 12,953 while Nasdaq dropped 31 points to 2944.

On the upside

Stifel Nicolaus analyst Jordan Rohan upgraded Pandora Media (NYSE: P) to a Buy rating.

An American Medical Association panel approved TranS1's (Nasdaq: TSON) application for a Category I CPT code for the medical device company's AxiaLIF implant.

A Seeking Alpha contributor recommended that investors acquire shares of Zogenix (Nasdaq: ZGNX) before the pharmaceutical releases earnings on Thursday.

On the downside

Analysts expect A123 Systems (NYSE: AONE) to post a loss for the fourth quarter on Thursday.

Warmer weather weighed down shares of coal companies Alpha Natural Resources (NYSE: ANR) and Patriot Coal (NYSE: PCX).

Shares of Polypore (NYSE: PPO) tumbled after General Motors (NYSE: GM) announced a five week production stoppage for the Chevy Volt.

In the broad market, declining issues outpaced advancers by a margin of more than 5 to 3 on the NYSE and by 7 to 5 on Nasdaq. The Russell 2000 which tracks small cap stocks slipped a point to 801.