Stocks Ends Mixed, S&P Snaps 5-Day Rally

Stocks closed narrowly mixed in lackluster trading Tuesday, with the S&P breaking a 5-day winning streak, as Greece's failed debt restructuring negotiations and a handful of tepid earnings reports weighed on the market.

The Dow Jones Industrial Average fell 33.07 points, or 0.26 percent, to finish at 12,675.75, led by Travelers and McDonald's. United Tech led the blue-chip gainers.

The S&P 500 slipped 1.35 points, or 0.10 percent, to close at 1,314.65, failing to extend its five-day winning streak. The Nasdaq eked out a gain of 2.47 points, or 0.09 percent, to end at 2,786.64.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped near 19.

Among key S&P sectors, telecoms sagged, while consumer discretionary gained.

Greece weighed on the markets after euro zone officials rejected a final offerfrom the country's private bondholders.

Adding to woes, S&P will likely cut Greece's ratings to "selective default" when the debt-ridden nation finishes its debt restructuring, though the move will not necessarily destroy the credibility of the EU, according to an official.

The Federal Reserve started its two day monthly meeting with an announcement on interest rates due on Wednesday before a press conference with Fed chairman Ben Bernanke. And for the first time, the central bank will unveiling policymakers' interest rate projections in a move for more transparency.

“Unless there’s something that’s surprisingly ominous in [the Fed’s] announcement, it will be a non-event for the markets,” said Bruce McCain, chief investment strategist at Key Private Bank. “When optimism rises, people have a glass-half-full view and skate past the problems,” said McCain. “So investors don’t need reassurance from the Fed.”

“With so many indicators and public sentiment turning positive, the Fed would be more than happy to stand back and watch the trends before they become involved,” continued McCain.

On the earnings front, Verizon fell after the wireless communication firm missed earnings expectations by a pennyas its business was hurt by the high costs of sales of smartphones.

Travelers was one of the biggest Dow laggards after the insurance company posted earnings that were below forecasts.

Johnson & Johnson posted earnings that beat expectations but the drugmaker issued guidance that disappointed.

DuPont squeezed out a small gain after the chemical company reported earnings that topped expectations, but revenue still missed estimates.

Meanwhile, McDonald's slipped even after the fast-food giant delivered quarterly results that easily topped expectations. (On Strong McDonald’s Earnings: Buy, Sell or Hold?)

Texas Instruments reported better-than-expected chip salesas customers in a broad area of industries replenished depleted inventories. In addition, at least 11 brokerages raised their price target on the semiconductor giant. Still, the shares finished lower.

So far, 20 percent of S&P 500 companies have posted earnings, with 58 percent beating expectations, far less than usual.

“This is a significant disappointment—estimates have already been brought down for this quarter, but the fact that we’re still disappointing suggests there needs to be more that has to come out of future estimates,” said McCain. “We’d be concerned that it’s going to be a continuing slide.”

Apple and Yahoo are among notable companies posting earnings after-the-bell tonight. Meanwhile, Sterne Agee raised its price target on the iPhone maker to $540 from $500. (Watch: Apple Ripe for a Correction?)

Boeing won a $693 million contract modification to build five more C-17 transport planes for the U.S. Air Force.

On the M&A front, semiconductor company Semtech said it is planning to acquire Canada's Gennum for about $497 million.

Also, U.S.-based Watson Pharmaceuticals said it bought the Australian and South East Asian generic drugs business of India's Strides Arcolab for $396 million.

And Starbucks the world's biggest coffee chain, plans to sell beer and wine in as many as 12 cafes in Atlanta and Southern California by the end of the year.

Meanwhile, Treasurys held their small lossesafter the government auctioned $35 billion in 2-year notes at a high yield of 0.250 percent and a bid-to-cover of 3.75.

—Follow JeeYeon Park on Twitter:

Coming Up This Week:

WEDNESDAY: Weekly mortgage apps, FHFA house price index, pending home sales, oil inventories, FOMC meeting announcement, Bernanke press conference; Earnings from Boeing, ConocoPhillips, United Tech, Delta, Motorola Solutions, Amgen, Netflix, SanDisk, Symantec
THURSDAY: Durable goods orders, jobless claims, new home sales, leading indicators, 7-yr note auction; Earnings from AT&T, Caterpillar, 3M, Nokia, AutoNation, Bristol-Myers, Time Warner Cable, Motorola Mobility, Starbucks
FRIDAY: GDP, consumer sentiment; Earnings from Chevron, P&G, DRHorton

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