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Stocks Zig-Zag; Techs Slip, Banks Climb

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.

JPMorgan , Google and Citigroup are among major companies expected to post earnings later this week.

Among techs, Cisco gained slightly even after the networking equipment company said it could eliminate as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth.

Apple was flat following news the chief patent lawyer Chip Lutton Jr., is leaving the company.

Dell and Hewlett-Packard slipped slightly after Jefferies started coverage of both tech giants with a "hold" rating and a $17 and $40 price target, respectively.

Microchip Tech plunged more than 10 percent to lead the S&P 500 laggards after the semiconductor company lowered its earnings guidance, citing challenges in its automotive segment tied to the earthquake in Japan. Meanwhile analysts were mixed as JPMorgan raised its price target on the firm to $35 from $29, while Stifel cuts its price target to $45 from $50.

News Corp gained after the media giant announced a $5 billion stock repurchase program.

Campbell Soup edged higher after the maker of canned soup said it expects this year's sales to be comparable to 2010's, with earnings up about 1 percent, as it sets out to expand.

President Obama will meet with congressional leaders againto discuss raising the debt ceiling and avert a looming debt default.

On the economic front, U.S. trade deficit surged in May to the highest level in almost three years, due to a big increase in oil imports, according to the Commerce Department. The deficit increased 15.1 percent to $50.2 billion in May.

European stocks were lower, with banks plunging as investors continued to worry that Greece’s debt problems will spread to Italy and Spain.

Coming Up This Week:

TUESDAY: 3-yr note auction, FOMC Minutes
WEDNESDAY: Weekly mortgage apps, import & export prices, Bernanke speaks, oil inventories, 10-yr note auction; Earnings from Yum Brands
THURSDAY: PPI, retail sales, jobless claims, business inventories, 30-yr bond auction, money supply, NPD video games sales; Earnings from JPMorgan and Google
FRIDAY: CPI, Empire state mfg survey, industrial production, consumer sentiment, credit card default rates reported, Dell shareholder mtg; Earnings from Citigroup and Mattel

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