US STOCKS-Wall Street dips, investors look to Friday payroll data
* Volatility expected before Friday's payroll report
* Ford Motor shares rise after June car sales data
* Dow off 0.4 pct, S&P 500 off 0.3 pct, Nasdaq down 0.4 pct
(Updates to early afternoon)
NEW YORK, July 2 (Reuters) - U.S. stocks dipped in afternoon trading Tuesday as declines in industrial and technology shares eroded earlier gains.
Wall Street had opened higher and continued to rise on strong June car sales data and as concerns receded about the Federal Reserve's plans to pare its massive bond-buying program.
But those gains were shed in afternoon trading and the S&P 500 lost steam after bumping against its 50-day moving average.
"We are in a really weak market as far as volume (is concerned), so it wouldn't take much to move the market either way. And we're in a neutral technical range where we're just going sideways," said Dave Chojnacki, market technician at Street One Financial in Huntington Valley, Pennsylvania.
Shares of automakers Ford Motor Co rose after it and rival General Motors reported strong sales last month. Ford said the overall U.S. auto industry will report its best monthly sales rate since December 2007. 1/2ID:nL2N0F80EL 3/8
Ford's stock advanced 2.8 percent to $16.18 after the automaker said June U.S. car sales rose 13.4 percent. Shares of GM rose 0.4 percent to $34.15.
Trading is expected to be light for the rest of this week, with U.S. markets closing early on Wednesday and all of Thursday for Independence Day, a day before the release of the June non-farm payrolls report. Economists have forecast an increase of 165,000 jobs.
The Dow Jones industrial average was down 63.47 points, or 0.42 percent, at 14,911.49. The Standard & Poor's 500 Index was down 4.39 points, or 0.27 percent, at 1,610.57. The Nasdaq Composite Index was down 12.34 points, or 0.36 percent, at 3,422.15.
Volatility jumped two weeks ago after the Fed said it expected to reduce its $85 billion a month of bond buying that has helped drive the U.S. stock market's rally this year. Since those comments, several Fed officials have said the central bank would not prematurely end its monetary stimulus, which has helped stabilize the market.
The S&P 500 is more than 3 percent below its May 21 record closing high of 1,669.16. Small caps have closed within a hair's breadth of all-time highs reached in May. The S&P Small-Cap 600 is 0.8 percent below its all-time closing high, and the Russell 2000 is 1.1 percent below its best close.
The recent outperformance by stocks with smaller market capitalizations and higher volatility points to a belief that the recent rise in interest rates is constructive, despite the S&P overall edging lower, according to a Monday note from Goldman Sachs strategists.
"The negative performance at the index level has been driven more by positioning and policy uncertainty than a deteriorating view on economic growth," they wrote.
William Dudley, president of the New York Fed, on Tuesday repeated comments made last week, saying the central bank is likely to support the economic recovery for some time.
Shares of alcoholic beverage company Constellation Brands Inc fell 5.5 percent to $50.18 after its first-quarter earnings and revenue missed expectations.
Sources said Pfizer Inc and Novartis AG may make preliminary bids for Onyx Pharmaceuticals Inc. On Sunday, Onyx turned down a roughly $10 billion offer from Amgen Inc. Onyx rose 2.5 percent to $134.67, after gaining more than 50 percent in Monday's session.
(Additional reporting by Ryan Vlastelica; Editing by Jan Paschal and Bernadette Baum)