Wall Street consolidated on Tuesday after its best week in two years with choppy, low-volume trading seen during the rest of the summer.

Equities had rallied for five straight days to push the S&P 500 up 5.6 percent, rebounding from weakness over the past two months. But with question marks over the economy and the debt ceiling, the summer could be a rough one.

I see a choppy environment ahead for this month, said Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors in St. Louis. You are dealing with fewer players in the market -- that helps increase the volatility.

Volume is expected to remain low in the holiday-shortened week, which could increase volatility, especially with Friday's jobs report looming large on the horizon. Markets were closed on Monday for the Independence Day holiday.

The Dow Jones industrial average <.DJI> gained 6.40 points, or 0.05 percent, to 12,589.17. The Standard & Poor's 500 Index <.SPX> dipped 0.77 of a point, or 0.06 percent, to 1,338.90. The Nasdaq Composite Index <.IXIC> rose 4.57 points, or 0.16 percent, to 2,820.60.

Linda Duessel, market strategist at Federated Investors in Pittsburgh, said the S&P 500 would likely fall back toward 1,250 this quarter, around its lows during the recent sell-off, before rebounding into the end of the year.

It's going to be a long quarter, she said. Confidence is low. The volatility index is low. You have professionals only pretty much trading the market.

Duessel said she is expecting the S&P 500 to face tough resistance at 1,350 as bulls try to take the market up toward its recovery high around 1,370.

Last week, moves to avert a debt crisis in Europe and surprisingly strong regional business data helped lift some of the gloom on Wall Street.

But a rebound in factory orders did little to boost the market after its recent run.

New orders received by U.S. factories bounced back in May, boosted by demand for transportation equipment, a government report showed. The 0.8 percent rise was slightly below economists' forecast.

Some traders may be betting that the S&P 500 Index's <.SPX> recent rally is coming to an end.

A substantial August put spread was transacted in the S&P 500 Index <.SPX> on Tuesday and was followed by the purchase of a hefty August $120-$127 put spread on the SPDR S&P 500 Trust , said Frederic Ruffy, WhatsTrading.com options strategist.

Morgan Stanley's U.S. equity strategist, Adam Parker, said lower growth and inflation worries are set to drive the S&P 500 price-to-earnings ratio toward 10 within five years as anxious investors keep a lid on stock prices.

During the recent sell-off, the P/E ratio, or what investors are willing to pay for a dollar of earnings, fell to 12.7 from 13.5, according to Morgan Stanley's data. The note was dated July 4.

In company news, Southern Union Co advanced 2.6 percent to $41.40 after pipeline operator Energy Transfer Equity LP raised its bid to buy its rival by 21 percent to about $5 billion, trumping the $4.9 billion bid offer from Williams Companies Inc .

Immucor Inc surged 30.3 percent to $27 after the diagnostics firm said it agreed to be acquired by private equity group TPG Capital for a fully diluted equity value of $1.97 billion.

(Reporting by Edward Krudy; Editing by Jan Paschal)

Morgan Stanley