Wall Street capped a day of listless trading Tuesday with modest gains, narrowly avoiding a three-day losing streak for the S&P 500 index.
A last-minute burst of buying nudged the benchmark index into positive territory after spending most of the day flat or down.
Stocks have wavered between small gains and losses following a run of record highs last week. Investors have been mostly pausing ahead of two days of congressional testimony by Federal Reserve Chair Jerome Powell. Traders will be listening to the exchanges that Powell has with lawmakers on Wednesday and Thursday for hints about the Fed's next move on interest rates.
The market rallied through much of June after the central bank signaled that it's prepared to cut rates to offset slowing global growth and the fallout from U.S. trade conflicts. But an unexpectedly strong U.S. jobs report Friday has dimmed investors' expectations.
Many traders still expect the Fed will cut its benchmark rate by a quarter percentage point at the end of the month, but fewer are now expecting a half-point reduction.
"Certainly the jobs report put into perspective just how much easing may be possible, given the continued strength of the economy," said Justin Kelly, chief investment officer at Winslow Capital. "So the market is likely recalibrating."
The S&P 500 rose 3.68 points, or 0.1%, to 2,979.63. The Dow Jones Industrial Average fell 22.65 points, or 0.1%, to 26,783.49.
The Nasdaq composite, which is heavily weighted with technology companies, gained 43.35 points, or 0.5%, to 8,141.73. The Russell 2000 index of smaller company stocks added 1.20 points, or 0.1%, to 1,562.59.
Major stock indexes in Europe finished lower.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.07% from 2.03% late Monday.
Despite lingering worries over trade, investors have pushed stocks mostly higher since early June after the Fed raised expectations for a rate cut. The benchmark S&P 500 hit all-time highs three straight days last week. Even with the sluggish start to the week, the S&P 500 is just 0.5% below its record high set Wednesday.
The question is whether the Fed will still see a good argument for cutting interest rates after the strong June jobs data.
The Fed's benchmark interest rate currently stands in a range of 2.25% to 2.5% and the central bank has not cut rates since the Great Recession in 2008. Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.
On Friday, the Fed emphasized that it would act as necessary to sustain the economic expansion, while noting that most Fed officials have lowered their expectations for the course of rates.
While investors are focused on the Fed this week, traders may also be holding back ahead of next week, when the bulk of S&P 500 companies begin reporting their second quarter results.
Expectations are generally low, and this could be the first time in three years that S&P 500 companies report a back-to-back decline in overall earnings, according to FactSet.
"This is the quiet before the storm, the storm in this case being earnings season," Kelly said. "It's going to be a mixed earnings season because we can all observe the weaker macroeconomic data, which is going to affect companies that are more dependent on a strong economy."
Companies in the technology, health care and consumer discretionary sectors are likely to deliver stronger results, given that U.S. consumer spending and sentiment remain strong.
"You may be starting to see investors position for that, believing that earnings may be positive catalyst for the share prices in those growth sectors," Kelly said.
Investors are in good shape heading into earnings season. The S&P 500 is up 18.9% and the Nasdaq has gained 22.7%.
Technology and communications services stocks drove much of Tuesday's gains in the market. Advanced Micro Devices climbed 3.5% and Twitter rose 3.3%.
Banks also notched solid gains, receiving a boost from rising bond yields, which drive up interest rates on mortgages and other loans. First Republic Bank gained 1.5%.
Higher mortgage rates spell bad news for would-be homebuyers, making home loans more expensive. That weighed on homebuilders, which closed broadly lower. Hovnanian Enterprises led the slide, dropping 4.2%.
Consumer staples, materials and industrials stocks lagged the broader market. Monster Beverage dropped 1.9%, Mosaic fell 3% and 3M slid 2.1%.
Investors bid up shares in Acacia Communications 35.1% after the company agreed to be acquired by Cisco Systems.
Energy futures closed broadly higher Tuesday. Benchmark crude oil gained 17 cents to settle at $57.83 a barrel. Brent crude oil, the international standard, rose 5 cents to close at $64.16 a barrel. Wholesale gasoline rose 3 cents to $1.93 per gallon. Heating oil climbed 1 cent to $1.91 per gallon. Natural gas rose 3 cents to $2.43 per 1,000 cubic feet.
Gold rose 50 cents to $1,397.50 per ounce, silver rose 10 cents to $15.07 per ounce and copper fell 4 cents to $2.62 per pound.
The dollar rose to 108.89 Japanese yen from 108.72 yen on Monday. The euro weakened to $1.1207 from $1.1212.