Wall St little changed after two-day climb; Dow erases losses

By Angela Moon

NEW YORK (Reuters) - U.S. stocks seesawed between modest gains and losses on Tuesday following two days of gains on Wall Street as investors weighed the implications of strong economic data for the path of monetary policy over the next several months.

The Dow Jones industrial average erased its earlier losses to trade flat in late afternoon trade, led by Cisco Systems , up 2.7 percent at $23.18.

The Institute for Supply Management said its services index rose a point to 55.4 in October despite a partial government shutdown during the first half of the month. The reading came in higher than September's 54.4, handily beating expectations for a slight deceleration.

 

Investors are scrambling to measure the impact of strong data on the Federal Reserve's decision to keep pumping $85 billion monthly into the economy in the form of bond purchases. This Fed stimulus has been instrumental in spurring a rally that has set the S&P 500 on course toward its best year in a decade.

The Fed has stressed its decision to change the level of stimulus is data dependent. Once the economy is strong enough, it has said it may begin to withdraw its massive bond purchases.

"Despite the bounce at the beginning of this week, equity markets likely need further consolidation, pullback before a more meaningful upside rally can develop given short-term indicators remain overbought," said Robert Sluymer, analyst at RBC Capital Markets in New York.

Shares of Tesla Motors were up 1.6 percent at $177.95 ahead of its earnings report after the closing bell.

The Dow Jones industrial average was up 2.20 points, or 0.01 percent, at 15,641.32. The Standard & Poor's 500 Index was down 1.81 points, or 0.10 percent, at 1,766.12. The Nasdaq Composite Index was up 8.30 points, or 0.21 percent, at 3,944.89.

On the New York Stock Exchange, declining stocks were beating advancers by 19 to 10, while on the Nasdaq decliners beat advancers by 14 to 11.

According to Thomson Reuters data, of 404 companies in the S&P 500 that have reported results through Tuesday morning, 69.6 percent have topped Wall Street's expectations, above the long-term average of 63 percent. However, just 53.3 percent beat revenue forecasts, below the 61 percent average since 2002.

Michael Kors Holdings gained 6.5 percent to $79.68 after the luxury apparel retailer reported a better-than-expected 40 percent jump in quarterly revenue.

GT Advanced Technologies jumped more than 20 percent to $10.10 after it said Apple will open a manufacturing facility in Arizona in partnership with the mineral crystal specialist to make sapphire materials for Apple's electronic devices.

CVS Caremark advanced 2.5 percent to $63.51 after the drugstore operator and pharmacy benefits manager posted a higher-than-expected quarterly profit and raised its forecast for the year.

Tenet Healthcare was the worst performer on the S&P 500, down 10 percent to $43.50 after its third-quarter net income slid from a year earlier.

(Reporting by Angela Moon; Editing by Nick Zieminski)