Stocks struggled for direction all day. After losing as much as 0.3% mid-day, the Dow Jones industrial average (INDU) ended the session up 20 points, closing at a fresh two-year high of 11,691.
Meanwhile, the S&P 500 (SPX) was down 2 points, or 0.1%; and the Nasdaq (COMP) fell 10 points, or 0.4%.
Throughout the day, investors weighed a better-than-expected factory orders report with concerns that stocks may be overextended, after posting double-digit percentage gains in 2010.
"We've had such a run here in the last four weeks, without any downside relief," said Rich Ilczyszyn, a market strategist with futures-broker Lind Waldock. "It's a normal market reaction, as we go up for a month or so and then we pull back."
Stocks ended 2010 with their best December since 1991, and some traders think they may have gotten a bit ahead of themselves. As a result, stocks were held back Tuesday as some investors tried to reap the rewards of their 2010 bets now -- in case the market falls back in January.
Traders also mulled over the minutes from the Federal Reserve's latest meeting in December, which showed that the central bank's policymakers remain committed to the purchase of $600 billion in U.S. Treasurys as a means of stimulating the economy.
Anticipation of that stimulus policy, referred to as "quantitative easing" or "QE2," had fueled bullish stock market gains in the second half of 2010. Investors had grown concerned about whether the Fed will follow through with the full $600 billion program in 2011.
The minutes alleviated some of those fears.
"Takeaway number one is they're not going to stop QE2 right now," said Doug Roberts, chief investment strategist at Channel Capital Research. "And it looks like from this, they're not as hesitant about QE3 as one might think."
Reports on jobless claims, job cuts and manufacturing are on tap later in the week, and the government's closely-watched jobs report is due Friday.
Economists expect the monthly report to show employers boosted payrolls by 135,000 last month, after adding 39,000 jobs in November.
The dollar lost ground against the the British pound, but gained versus the Japanese yen and the euro.
Oil for February delivery fell $2.17 to settle at $89.38 a barrel.
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