Stocks paring earlier losses in choppy, low-volume trading Tuesday, as investors largely shrugged off Moody's downgrade of Portugal's rating into junk territory.
The Dow Jones Industrial Average zigzagged, after closing higher for the fifth session in the previous session.
HP and JPMorgan led the blue-chip laggards, while Chevron and Disney gained.
The S&P 500 and the tech-heavy Nasdaq were mixed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained above 16.
Among key S&P sectors, financials and industrials led the laggards, while energy gained.
Moody's cut Portugal's credit rating by four levels, two notches into junk territory, saying there is great risk the country will need a second round of official financing before it can return to capital markets. The euro extended losses against the dollarfollowing the news.
"When sovereign debt issues are laughed off by central banks...[and] when rules of the game have changed so much, people don't look at the downgrades as a big deal anymore," said Joe Saluzzi, co-manager of trading at Themis Trading.
Volume is expected to remain thin amid shortened trading week, which could increase volatility. Markets were closed on Monday for the Independence Day holiday.
“It seems like stocks are taking a break today,” said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research. “It’s a minor victory for the bulls that we’re not giving up any of the gains last week and we’re holding tough.”
While stocks are likely to remain “choppy for the summer,” Detrick expects to see an uptrend by year-end with the S&P finishing around 1,550 driven by earnings and economic reports.