Stocks continued to face headwinds on Tuesday from the ongoing stalemate in Washington over raising the debt ceiling, with light volume showing the gridlock in Washington has made investors nervous.
Major averages were mixed. The Nasdaq rose slightly as technology shares gained, while the Dow was the biggest loser largely due to a drop-off in 3M
A failure to raise the U.S. debt limit by an August 2 deadline could roil markets and hurt the economy if the United States puts off paying bills.
We've been seeing volume start to dry up as traders are seeing less positions, said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.
Just 3.25 billion shares had changed hands in composite trading as of 12:40 p.m. ET, another lower-than-average day of activity.
No one wants to be short and no one wants to be long, Lip said. If there is a resolution, shorts will lose money; if there is no resolution, bulls will lose money. Investors are just kind of sitting on the sidelines.
Shares of 3M Co
The Dow Jones industrial average <.DJI> was down 57.67 points, or 0.46 percent, at 12,535.13. The Standard & Poor's 500 Index <.SPX> was down 1.66 points, or 0.12 percent, at 1,335.77. The Nasdaq Composite Index <.IXIC> was up 4.21 points, or 0.15 percent, at 2,847.01.
Declining stocks outnumbered advancing stocks roughly four-to-three on the New York Stock Exchange and the Nasdaq.
Industrial stocks were among the worst performers, with the S&P industrials index <.GSPI> down 1.7 percent.
Ford Motor Co
U.S. President Barack Obama took to the airwaves Monday night to rally support for a debt plan proposed by Democrats, and warned that failure to make a deal would severely hurt the nation.
In this case, the markets are being fairly rational, waiting to see which side blinks, said Fred Dickson, chief market strategist at D.A. Davidson & Co. Lake Oswego, Oregon.
Technology stocks led the broader market's gains, with the SPDR Technology Select Sector Index exchange-traded fund
The market gained some support from data showing U.S. consumer confidence edged higher in July, though consumers remained gloomy about the current climate.
(Reporting by Ashley Lau; editing by Leslie Adler