"Fiscal cliff" standoff keeps Wall Street subdued

Stocks were little changed in a lightly traded session on Monday, with investors limiting bets ahead of what could be a drawn-out battle over the "fiscal cliff."

Volume was light, with the U.S. bond market and government offices closed for the Veterans Day holiday. Trading was also affected by problems on the NYSE Euronext . The Big Board suspended trading in more than 200 stocks due to problems with a trade-matching engine, though the stocks in question were still active on other exchanges.

Major averages vacillated between modest gains and losses throughout the session.

Worry about the fiscal cliff - a series of budget cuts and tax hikes that will start to go into effect in the new year - has investors cautious because of the potential for harm to U.S. economic growth.

Barclays cut its year-end target for the S&P 500 to 1,325 from 1,395, saying "there is little basis to believe a grand compromise is in the offing."

Though most consider it unlikely that some deal will not be reached, analysts fear going over the cliff could push the economy back into recession. There are also concerns that a protracted debate could hurt business and investment sentiment.

"The concern is there may be an impasse every bit as bad as what we had in August 2011," Brian Gendreau, market strategist with Cetera Financial Group in Gainesville, Florida, said, referring to the last-minute agreement policymakers reached on raising the U.S. debt ceiling.

Last year's political logjam bruised consumer attitudes and led to a downgrade of U.S. debt.

Still, some recent comments from politicians suggest a compromise might be more likely this time, Gendreau said.

NYSE first alerted traders it was having problems with one of its cash equity matching engines at 9:38 a.m. and said it would not publish quotes on a total of 216 stocks, including CVS Caremark Corp and Lazard Ltd .

Nasdaq OMX Group , BATS Global Markets, and Direct Edge exchanges stopped sending orders to the NYSE, and investors wishing to trade in those shares did so on these exchanges rather than the NYSE. The NYSE said trading in those issues would return to normal on Tuesday.

The S&P index hovered around its 200-day moving average after last week closing below the level for the first time in five months. An extended run under it could signal further losses ahead.

The Dow Jones industrial average slipped 0.23 point to 12,815.16. The Standard & Poor's 500 Index added 0.15 point, or 0.01 percent, to 1,380.00. The Nasdaq Composite Index was off 0.62 point, or 0.02 percent, to 2,904.25.

The S&P 500 is still up about 10 percent for 2012, though recent months have eroded those gains. The Nasdaq has fallen for five straight weeks.

Volume was roughly 4.62 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the year-to-date average daily closing volume of 6.52 billion.

Decliners outnumbered advancers on the NYSE 1,539 to 1,406 on the New York Stock Exchange. On the Nasdaq, decliners outpaced advancers by 1,304 to 1,121.

Merger activity bolstered the price of specific stocks. Precision Castparts Corp offered to buy Titanium Metals Corp for $2.9 billion, while Leucadia National Corp agreed to buy investment bank Jefferies Group for $3.6 billion.

Shares of Titanium surged 42.6 percent to $16.50, while Jefferies climbed 14 percent to $16.27. Precision rose 4.7 percent to $179.46. In contrast, Leucadia fell 3 percent to $21.14.

The S&P 500 dropped more than 2 percent last week, the worst week for the benchmark index since June. The drop was partly propelled by concerns about whether there will be a timely solution to avoid the fiscal cliff.

Gilead Sciences supported the Nasdaq after the company reported over the weekend a 100 percent cure rate using a combination of drugs in a small number of patients with the most common and hardest to treat form of hepatitis C. Gilead was up 13.7 percent at $73.93.

Also in the biotech sector, Celgene Corp rose 5.8 percent to $75.66 after a late-stage clinical trial showed its drug Abraxane improved survival in patients with pancreatic cancer.