Stocks Shrug Off Fed Minutes; Industrials Slip

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.

Among techs, Cisco gained, shrugging off news that the networking equipment company 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. (Read More: Apple vs Chips—Who's Telling True Tech Story?)

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

However, Novellus Systems tumbled more than 10 percent after the chip gear maker said it expects bookings to continue to fall as chipmakers curb capacity, even as the firm posted revenue below estimates.

Microchip Tech plunged more than 10 percent to lead the S&P 500 laggards after the semiconductor firm lowered its earnings guidance. 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.

Other chipmakers were also under pressure, including Analog Devices and Texas Instruments .

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.

News Corp gained after the media giant announced a $5 billion stock repurchase program. Meanwhile, the British government joined efforts to block Rupert Murdoch's bid for broadcaster BSkyB, following the phone-hacking scandal by one of his newspapers.

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.

The euro slipped against the dollar, but came off its session lows. Gold climbed above $1,544 an ounceas investors flocked to the precious metal as a safe haven play. Oil rose in volatile trading—U.S. light, sweet crude gained $2.28 to settle at $97.43 a barrel, while London Brent crude climbed above $117.

Treasury prices were steadyafter the government auctioned $32 billion in 3-year notes, which had a high yield of 0.670 percent and a bid-to-cover of 3.22. Auctions of 10-year notes and 30-year bonds are expected on Wednesday and Thursday, respectively.

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.

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

Coming Up This Week:

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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