U.S. stocks took a breather on Tuesday after the best five days for the S&P 500 in more than two years as investors look to earnings for a reason to extend the market's rebound.
Stocks wavered between gains and losses throughout the session. Markets have been reacting to news from the euro zone where officials are trying to contain a debt crisis that threatens large European banks and global financial stability.
The focus now will shift to earnings season, which begins with Alcoa Inc's
Earnings are always important but even more so here after several quarters of solid earnings across many industry sectors. I think investors are going to want to see that continuing or solidifying itself. Otherwise you could see further selloffs, said Michael Cuggino, president and portfolio manager of Permanent Portfolio Funds in San Francisco.
Materials stocks fell throughout the third quarter on worries about global growth slowing. Alcoa gained 2 percent to $10.30 in regular trading but is down 35 percent since the beginning of the third quarter.
After the market closed, Alcoa said third-quarter profit jumped from a year ago, but earnings and revenue slipped from the second quarter as economic growth slowed from the first half of this year.
A delay in a key vote by Slovakia on expanding the euro zone rescue fund has also kept investors cautious.
With 16 of 17 euro zone states having ratified a pact to boost the size and powers of the European Financial Stability Facility bailout fund, all eyes turned to Slovakia. The country's finance minister said the country was expected to approve the changes this week.
Any more delays in coming up with a plan intended to head off crisis could give the market an excuse to sell. Stocks have reached the top of a recent range, hitting resistance around 1,195 on the S&P 500. Another area of resistance is seen at 1,215 on the S&P 500, said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.
The bounce we've had is kind of getting us close to resistance levels ... we're looking to see if it can break through, he said.
The Dow Jones industrial average <.DJI> was down 16.88 points, or 0.15 percent, at 11,416.30. The Standard & Poor's 500 Index <.SPX> was up 0.65 point, or 0.05 percent, at 1,195.54. The Nasdaq Composite Index <.IXIC> was up 16.98 points, or 0.66 percent, at 2,583.03.
After the close, Alcoa, the largest U.S. aluminum company, dipped slightly $10.03 after it posted results.
In the past week, analysts have lowered their consensus earnings estimates for Alcoa, citing a precipitous drop in metals prices in recent months sparked by global economic concerns.
About 6.90 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaq for the day, well below the year's daily average so far of 8.03 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of roughly 16 to 13, while on the Nasdaq, advancers beat decliners by about 3 to 2.
(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)