U.S. stocks ended little changed in a low-volume session on Monday after a downgrade of Greece's debt took the wind out of the market's sails.

Equities have been sensitive to debt problems in Greece and other European nations in recent months on concerns the euro zone's fiscal problems will hamper a global economic recovery.

Although not unexpected, the downgrade weighed on a market that had rallied on earlier data showing euro-zone industrial output surged in April, achieving the biggest year-on-year percentage gain in almost two decades.

The downgrade is capturing the market a little bit off guard, said Nick Kalivas, senior equity index analyst at MF Global in Chicago. The market is still very sensitive to these events and people are very cautious.

Cyclical sectors such as materials and financials that benefit from signs of a strong economy gave up much of their earlier gains. Dow component DuPont Co

fell 2 percent to $36.86. JPMorgan Chase also lost 2 percent, ending at $37.33. The BKW index <.BKX> fell 0.8 percent.

Moody's Investors Service downgraded Greece's government bond ratings on Monday afternoon to junk territory, citing the risks in the joint euro-zone and IMF rescue package for the debt-laden country.

The Dow Jones industrial average <.DJI> slipped 20.18 points, or 0.20 percent, to 10,190.89. The Standard & Poor's 500 Index <.SPX> shed 1.97 points, or 0.18 percent, to 1,089.63. But the Nasdaq Composite Index <.IXIC> inched up just 0.36 of a point, or 0.02 percent, to 2,243.96.

Earlier, the S&P 500 was up as much as 1.3 percent, breaking through the psychologically important 1,100 level and brushing up against its 200-day moving average at 1,107.95, a level that the index has struggled to break through for the last month.

However the CBOE volatility index <.VIX> fell 0.7 percent to 28.59. Although the VIX pared the extent of its earlier decline, the index indicated the market was not anticipating a return of recent volatility when the VIX rose to nearly 50 in mid-May.

Investors snapped up some chip makers' stocks and that helped bolster the Nasdaq. The CEO of chip maker Taiwan Semiconductor Manufacturing Co <2330.TW> said strong demand from China will lift the growth outlook for the semiconductor market to 6 percent or 7 percent for the next five years.

SanDisk Corp's shares rose 6 percent to $47.31 after analyst Craig Ellis at investment firm Caris & Co told Barron's newspaper that the stock could rise to $52 as the company benefits from a boom in demand for flash memory.

The Philadelphia semiconductor index <.SOXX> advanced 0.7 percent.

U.S. crude oil futures prices rose 1.8 percent, or $1.34, to settle at $75.12 a barrel, in response to optimism about the global recovery that was stirred by the European industrial production data. But even oil futures pulled back from session highs and gains of more than 2.5 percent after Moody's downgraded Greece's debt to junk status.

Another note from Moody's Investors Service, this time on the oil sector, highlighted the uncertainty created by BP's oil spill. The spill has created an unprecedented financial, legal, regulatory and environmental crisis for companies that operate in the Gulf of Mexico, Moody's said.

BP Plc's U.S.-traded shares continued their slide, falling 9.7 percent to $30.67.

U.S. President Barack Obama plans to press the company to set up an escrow account to pay damage claims by individuals and businesses hurt by BP's oil spill in the Gulf of Mexico. The British company said the cost of the spill hit $1.6 billion.

The advance on Wall Street followed strong gains in European and Asian stock markets, as well as the S&P 500's 2.5 percent gain for last week. The S&P 500 is still down more than 10 percent from its April 23 closing high for the year.

Shares of some airlines also rose after Deutsche Bank AG started coverage of the stocks. AMR Corp , the parent of American Airlines, was up 2.3 percent at $8.45 after Deutsche Bank gave it a buy recommendation.

About 7.87 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, sharply below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about five stocks rose for every four that fell.

(Reporting by Edward Krudy; Editing by Jan Paschal)