Stocks finished mixed Monday after wavering in a tight range for most of the session as ongoing worries over Spain overshadowed results of the weekend's Greek elections and as investors hesitated to jump in ahead of the FOMC meeting.
The Dow Jones Industrial Average slipped 25.35 points, or 0.20 percent, to finish at 12,741.82, led by H-P . Home Depot gained.
The S&P 500 eked out a gain of 1.94 points, or 0.14 percent, to end at 1,344.78. The Nasdaq gained 22.53 points, or 0.78 percent, to close at 2,895.33.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 19, hitting its lowest level in almost five weeks.
Among the key S&P sectors, energy led the laggards, while techs and consumer discretionary ended higher.
“Unfortunately [the Greek election] news yesterday was better than the alternative, but was nowhere close to an actual solution to Greece and to the euro zone as a whole,” said Neel Kashkari, head of global equities at Pimco on CNBC’s “Squawk Box.” “I’m afraid we’re going to continue to see half measures…but probably nothing to actually quell the crisis once and for all. We’ve seen two years of extreme volatility; it’s likely to see extreme volatility for the near future.”
European shares finished mixed despite Greece’s pro-bailout parties won a narrow victory in Sunday’s election as investors’ attention turned once more to Spain’s beleaguered banking sector. (Read More: No Lasting Rally Until EU Takes Bold Action—Analysts)
Spain's 10-year yield hit a euro-era record high of 7.18 percent, fueling fears that the nation may need a sovereign bailout. Shares of Spain's Banco Santander , Telefonica and BBVA fell sharply.
World leaders will meet at a G20 summit in Mexico and are expected to pile pressure on European leaders to find a lasting solution to the euro zone debt crisis.
Financials, the most sensitive sector to worries over the euro zone debt, were trading lower. Citigroup and Morgan Stanley slumped.
“People are wondering if they will be able to form a government in Greece … It remains on the top of everyone’s list but we are going to have an FOMC meeting—what [the Fed] needs to do is to stimulate some spending,” said Art Cashin, director of floor operations at UBS Financial Services. “I don’t know if they’re prepared to something radical like expanding the inflationary target but it’s one of the few things that would stimulate people to move money.”
The Fed holds a two-day monetary policy meeting starting Tuesday, with chairman Bernanke expected to hold a news conference at the end of the meeting Wednesday afternoon.
Meanwhile, Bank of America is close to a deal to sell its overseas wealth unit to Julius Baer in a deal valued at between $1.5 billion to $2 billion, sources told CNBC.
On the economic front, homebuilder sentiment gained to 29 in June to its highest level in five years, according to the National Association of Home Builders. However, the index was still well below 50, implying that more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.
Homebuilders including Toll Brothers , Beazer and Pulte advanced.
Facebook shares rallied above $31 a share. The social-networking giant announce it will buy Face.com, a site that provides facial-recognition technology.
Groupon rallied after Morgan Stanley upgraded the daily-deal site to "overweight" from "equal weight."
Barnes & Noble turned lower after Benzinga reported that the company will not be part of today's Microsoft tablet announcement, according to a spokesperson. Shares had surged earlier amid speculation that Microsoftwill launch a tablet with the book retailer.
On the M&A front, Extorre Gold Mines skyrocketed after YamanaGold said it will acquire the gold and silver producer in a deal valued around $400 million.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
TUESDAY: Housing starts, FOMC meeting begins, Groupon shareholders mtg; Earnings from FedEx, Discover Financial, Adobe Systems
WEDNESDAY: Weekly mortgage apps, oil inventories, FOMG mtg announcement, FOMC forecasts, Bernanke press conference; Earnings from Bed, Bath & Beyond
THURSDAY: Jobless claims, PMI manufacturing index flash, existing home sales, Philadelphia Fed survey, FHFA home price index, leading indicators, Best Buy shareholders mtg, Google shareholders mtg; Earnings from ConAgra, Rite Aid, Oracle
FRIDAY: Earnings from Darden Restaurants
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