U.S. stocks were mixed to lower in a volatile session on Tuesday on uncertainty over a financial bailout for Spain and as investors worried about disappointing third-quarter U.S. earnings.
The Dow was pressured by stocks closely tied to the pace of growth, including Caterpillar Inc and Boeing Co . A major headwind for the global economy has been falling demand from Europe, which has been drifting toward recession.
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Spain was said to be ready to ask the euro zone for help, but Prime Minister Mariano Rajoy said a request wasn't imminent. In addition, Germany has signaled that Madrid should hold off on making its request, according to European officials on Monday.
"Spain being rescued would be good for risk assets and ultimately global growth, but while the benefits are largely priced in, we're still getting conflicting signals that understandably have investors apprehensive," said Brian Barish, president of Cambiar Investors LLC in Denver.
The S&P rose nearly 6 percent in the third quarter, lifted by accommodative moves by the Federal Reserve and European Central Bank, which market participants bet would boost flagging growth.
If Madrid were to seek a rescue, it would trigger European Central Bank buying of its bonds and help to ease U.S. investors' nervousness about the euro zone's impact on the U.S. economy.
"Until we get some kind of clarity, we should expect a lot of volatility and difficulty holding onto gains," said Barish, who helps oversee $7 billion in assets.
The Dow Jones industrial average <.DJI> was down 55.86 points, or 0.41 percent, at 13,459.25. The Standard & Poor's 500 Index <.SPX> was down 1.26 points, or 0.09 percent, at 1,443.23. The Nasdaq Composite Index <.IXIC> was up 0.16 points, or 0.01 percent, at 3,113.69.
The Dow and S&P 500 extended losses and the Nasdaq turned negative, with weaker-than-expected results from Mosaic adding to worries about the upcoming third-quarter earnings period.
Mosaic tumbled 3.9 percent to $55.77 as one of the S&P's biggest percentage decliners after earnings and revenue missed expectations.
JPMorgan Chase & Co was sued by New York's attorney general on Monday in the first action to come out of a working group created by President Barack Obama to go after wrongdoing that led to the financial crisis. The civil fraud lawsuit centered on mortgage-backed securities packaged and sold by Bear Stearns, which JP Morgan acquired.
JPMorgan was down 0.2 percent at $40.87.
Major car companies reported September sales, with General Motors and Chrysler Group LLC posting gains while Ford Motor Co remained flat.
GM, the largest U.S. automaker, reported a 1.5 percent increase, while Ford reported sales on par with its results from a year earlier. Chrysler showed a 12 percent jump in sales.
Shares of GM surged 3.8 percent to $23.97 while Ford lost 1.4 percent to $9.79.
PetSmart Inc shares added 1.2 percent to $68.38 after S&P Dow Jones Indices said after Monday's close the company will replace Sunoco in the S&P 500 on October 4.
Hedge fund manager David Einhorn again made critical comments about Green Mountain Coffee Roasters Inc and Chipotle Mexican Grill .
Einhorn unveiled a short position in Green Mountain a year ago but the stock rallied 2.4 percent to $23.88 as one of the biggest gainers on the Nasdaq 100 <.NDX>. Chipotle fell 4 percent to $303.38.
Shares of ArQule Inc tumbled 54 percent to $2.30 after the biotechnology company and Japan's Daiichi Sankyo <4568.T> said they will end a late-stage trial of their experimental lung cancer drug.
(Editing by Kenneth Barry and James Dalgleish)