Stocks shaved their gains Tuesday after Fed officials raised the possibility of further easing if economic growth continues to slow and following news that Moody's downgraded Ireland's rating.
The Dow Jones Industrial Average turned lower, 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 were lower. The CBOE Volatility Index, widely considered the best gauge of fear in the market, was gained above 19.
Among key S&P sectors, industrials slipped, while utilities gained.
"Some of yesterday’s panic regarding the euro zone and Italy may have been a little bit too much too soon," said Howard Ward, portfolio manager of GAMCO.
Ward added he expects positive earnings results ahead, which will eventually propel the S&P to the 1,425-range by year-end.
Some Fed officials said they arewilling to provide more monetary policy easingif the recovery continues to slow, according to the latest minutes of their June meeting. Fed officials also said they expect the economy would pick up in the second half of the year.
"Just the pure mention of QE3 is a positive for the equity markets—we saw the big rallies we got off the first QEs that we had," Warren Meyers, former CEO at Walter J. Dowd told CNBC. "But once that's over with, everyone comes back to reality. We're just beginning earnings season and there's so many issues going on with the data coming out with the U.S. and the global issues. We're due to pullback a bit and mellow out."
Alcoa was flat after the aluminum maker posted a profit 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 report later this week.