Stocks posted a three-day gain Tuesday, but lost steam in the final hour of trading, after a report that the euro zone became divided over terms of Greece's second bailout.
The Dow Jones Industrial Average gained 146.83 points, or 1.33 percent, to finish at 11,190.69. Stocks were up almost 320 points in session highs.
Hewlett-Packard and Disney led the blue-chip gainers, while BofA declined.
The S&P 500 climbed 12.43 points, or 1.07 percent, to close at 1,175.38, while the Nasdaq rose 30.14 points, or 1.20 percent, to end at 2,546.83.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped below 38.
All 10 S&P sectors managed to finish higher, although significantly off their best levels earlier in the day.
The market rallied sharply throughout the day, rising almost 3 percent across the board in session highs, but quickly pared their gains following an FT report that said there is a split in the euro zone over Greece's default terms. As many as seven of the bloc’s 17 members are arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.
In addition, the European Commission is expected to create a financial transaction tax, despite opposition from several member nations. The plan will be discussed in a speech before the European Parliament by José Manuel Barroso, the president of the commission, at 3am ET on Wednesday in Strasbourg, France.
“There’s a ‘game changer’ headline that changes the rule of trading every hour,” said Todd Schoenberger, managing director of LandColt Trading. “Investors need to proceed with caution—it’s a ‘buyer beware’ market at this point."
Others warned that volatility will continue to haunt investors.