The S&P 500 failed to break a key technical resistance level for a second day on Tuesday as low trading volume raised further questions about the market's strength.
The broader market index closed slightly below 1,333, a closely watched level as it represents a doubling from the low reached in March 2009.
Trading volume was relatively low with just 6.85 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, compared with last year's estimated daily average of 8.47 billion.
But a rebalancing of the Nasdaq 100 <.NDX>, which takes effect on May 2, spurred traders to buy companies with increased weightings, including Microsoft Corp
The (low) volume is a sign that there is little conviction from sellers in this market, said Jeff Kleintop, chief market strategist for LPL Financial in Boston.
The S&P has slowly built gains since mid-March in mostly quiet sessions. Last week was the thinnest week of trading so far in 2011 and Monday was the lowest-volume day of the year.
Those wishing for more volume should be careful what they wish for since a rebound in trading volume may come with the return of volatility, rather than the steady gains we have seen since last summer.
Minutes of the last Federal Reserve meeting showed some Fed officials believed the U.S. central bank should tighten conditions before year-end. Stock market reaction was muted.
Chip stocks were supported after Texas Instruments
The Dow Jones industrial average <.DJI> slipped 6.13 points, or 0.05 percent, to end at 12,393.90. The Standard & Poor's 500 Index <.SPX> inched down just 0.24 of a point, or 0.02 percent, to 1,332.63. The Nasdaq Composite Index <.IXIC> rose 2.00 points, or 0.07 percent, to 2,791.19.
The announcement of a merger with Texas Instruments drove National Semi shares up 71 percent to $24.06. Texas Instruments added 1.7 percent to $34.69.
Tech stocks are leading this big wave of merger and acquisition activity, which people are trying to position themselves ahead of and which I expect to continue, said James Swanson, chief investment strategist at Boston-based MFS Investment Management, which oversees about $200 billion.
The deal is the latest in a string of multibillion-dollar deals that have helped pushed stocks higher in recent weeks.
China's central bank increased interest rates on Tuesday for the fourth time since October, raising suspicions that data next week may show higher inflation than expected in March.
Advancing stocks outnumbered declining ones on the NYSE by 1,629 to 1,312, while on the Nasdaq, advancers beat decliners by 1,328 to 1,270.
(Reporting by Angela Moon; Editing by Jan Paschal)