Stocks wavered in a tight range Tuesday as investors continued to worry over the ongoing euro zone debt crisis and the struggle to break the impasse over a reduction in the U.S. deficit.
The Dow Jones Industrial Average bobbed in and out of positive territory, after ending at its lowest level since Jun. 30 in the previous session.
Boeing and Intel led the blue-chip decliners, while Cisco and AmEx gained.
The S&P 500 and the tech-heavy Nasdaq also declined. The CBOE Volatility Index, widely considered the best gauge of fear in the market, was gained above 19.
Among key S&P sectors, techs and industrials lagged, while financials and health care gained.
"[Stocks are] trying to build a base and trying to see if they can come off it—the S&P stopped almost dead-on its 50-day moving average, which gave people a little hope," Art Cashin, director of floor operations at UBS Financial Services told CNBC.
"We have two rumors that the ECB is possibly buying some ofthe Italian and Spanish paper and rumors that there might be some kind of progress on the debt ceiling," said Cashin.
Stocks were buoyed earlier amid chatter that the European Central Bank was buying peripheral paper for the first time in three months, with Portugal the suspected target of the purchases.
European Union leaders are expected to hold an emergency meetingon Friday after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion to Italy and Spain.
In addition, a newspaper report saying six Spanish banks had failed new European banking stress tests—the results of which are due to be released on Friday—added to nervousness. The euro slipped against the dollar, but came off its session lows.
Investors will also focus on minutes from the Federal Reserve Open Market Committee’s last meeting, released at 2 pm ET, to provide an insight into the Fed’s thinking on the economic recovery in the world’s largest economy.
Dow component Alcoa was flat after the aluminum maker posted a profit which came in line with forecasts but reported a disappointing outlook. Meanwhile, UBS cut its price on the firm to $16.25 from $16.75. The Dow component unofficially kicked off the second-quarter earnings season.