The S&P and Nasdaq were little changed in thin trade on Tuesday as investors hoped for a resolution in the debt ceiling stalemate, while industrial stocks fell after 3M's profit failed to top estimates.

Wall Street spent much of the morning in negative territory on fears a failure to raise the U.S. debt limit by an August 2 deadline would deeply damage the economy.

Investors are holding back to wait and see what happens, said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.

The Dow Jones industrial average <.DJI> dropped 63.39 points, or 0.50 percent, at 12,529.41. The Standard & Poor's 500 Index <.SPX> was down 2.74 points, or 0.20 percent, at 1,334.69. The Nasdaq Composite Index <.IXIC> was off 0.23 points, or 0.01 percent, at 2,842.57.

Industrial stocks were among the worst performers, with the S&P industrials index <.GSPI> down 1.7 percent. 3M Co dropped 4.5 percent to $90.79 after the maker of Post-It notes met estimates, but failed to follow the lead of its industrial peers with an earnings beat.

3M was the top drag on the Dow industrials, making blue chips the worst performer of the three major indexes.

Ford Motor Co fell 1.7 percent to $12.97, even after the automaker's second-quarter earnings beat expectations.

U.S. President Barack Obama took to the airwaves Monday night to rally support for a package proposed by Democrats, warned that failure to make a deal would severely hurt the nation.

The level of confidence that a deal will be done is starting to weaken, based on last night's speeches and all of the analysis that's gone on since last night, said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

Technology stocks led the broader market's gains, with the SPDR Technology Select Sector Index up 0.5 percent. Netflix Inc slid nearly 9.3 percent to $255.40, pressuring the Nasdaq, a day after the movie rental company warned its red-hot subscriber growth would cool down in the third quarter.

The market gained some support from data showing U.S. consumer confidence edged higher in July, though consumers remained gloomy about the current climate.

The Commerce Department reported sales of new single-family homes fell by 1 percent in June.

Declining stocks outnumbered advancing stocks roughly two-to-one on the New York Stock Exchange and the Nasdaq.

(Reporting by Ashley Lau; additional reporting by Angela Moon; editing by Jeffrey Benkoe)