Wall St cautious as European outcome awaited

By Ryan Vlastelica

Equities initially rose as much as 1 percent before losing gains while the Nasdaq fell as much as 1 percent on Amazon.com's <AMZN.O> disappointing outlook before cutting losses.

A meeting of European leaders to tackle the region's debt crisis began in optimism, contributing to the early gains, but prospects for a comprehensive deal became cloudier as several thorny issues remained unresolved. The summit was set to begin shortly on Wednesday in Brussels. Investors worry that in the absence of a deal, the crisis could spread and erode domestic bank profits.

"There are some questions about whether they will come up with something, and that lack of resolution is the main dampener for stocks," said John Carey, portfolio manager at Pioneer Investment Management in Boston.

Since a recent low hit on October 3, the S&P has risen almost 12 percent with hopes over a sovereign debt deal in Europe a major contributor to those gains.

Amazon fell 12 percent to $200.10 a day after forecasting a disappointing outlook for the current quarter on costs related to Kindle and other investments. On the upside, Boeing Co <BA.N> rose 3.6 percent to $66.02 after raising its outlook.

"In the face of all this macro uncertainty, corporate disappointments will get more attention than positive ones," said Carey, who helps oversee $260 billion in assets.

The Dow Jones industrial average <.DJI> was up 40.15 points, or 0.34 percent, at 11,746.77. The Standard & Poor's 500 Index <.SPX> was down 0.06 point at 1,228.99. The Nasdaq Composite Index <.IXIC> was down 15.70 points, or 0.60 percent, at 2,622.72.

With corporate earnings in high gear, Ford Motor Co <F.N> reported lower third-quarter earnings but beat estimates and offered a full-year forecast that suggested operating margins would fall in the current quarter. The stock fell 4 percent to $11.94.

In the latest economic data, new U.S. single-family home sales rose at their fastest pace in five months in September, but sustained price declines indicated the housing market is far from recovery.

Separately, the government said demand for U.S. durable goods rose more than expected in September to post the largest increase in six months.

About four stocks rose for every three that fell on the New York Stock Exchange, while on the Nasdaq, decliners slightly outnumbered risers.

(Editing by Kenneth Barry)