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US STOCKS-S&P 500 near flat while debt issue drags on

Published 07/26/2011, 03:06 PM
Updated 07/26/2011, 03:12 PM
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* S&P 500 briefly turns up; Baidu shares gain

* 3M, industrial stocks among worst performers

* Netflix tumbles on subscriber growth warning

* Dow off 0.4 pct, S&P off 0.1 pct, Nasdaq up 0.2 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to afternoon, changes byline)

By Caroline Valetkevitch

NEW YORK, July 26 (Reuters) - U.S. stocks were near flat on Tuesday as ongoing concern about a stalemate in the U.S. debt talks offset healthy earnings from corporations.

Light volume indicated many investors were choosing to stay on the sidelines.

A failure to raise the U.S. debt limit by an Aug. 2 deadline could roil markets and hurt the economy if the United States puts off paying bills.

U.S. President Barack Obama took to the airwaves Monday night to rally support for a debt plan proposed by Democrats, and warned that failure to make a deal would severely hurt the nation. [ID:nN1E76P002] and [ID:nUSBUDGET]

"This is a political issue. Both of these sides feel they have a great deal to lose, but we all feel as though there's going to be a deal. Look at the market, the S&P is down nothing. There's going to be a deal," said Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York.

Technology stocks led the broader market's gains, with the SPDR Technology Select Sector Index exchange-traded fund up 0.7 percent.

Shares of China's top search engine Baidu Inc jumped 5.2 percent to $164.66, a day after it forecast revenue well ahead of Wall Street expectations. For details, see [ID:nnL3E7IP2Y]

Mostly stronger-than-expected profits so far for the second quarter have provided a positive for the market despite the debt debate.

The Dow Jones industrial average <.DJI> was down 53.51 points, or 0.42 percent, at 12,539.29. The Standard & Poor's 500 Index <.SPX> was down 1.14 points, or 0.09 percent, at 1,336.29. The Nasdaq Composite Index <.IXIC> was up 4.84 points, or 0.17 percent, at 2,847.64.

Just 4.55 billion shares had changed hands in composite trading, another lower-than-average day of activity.

Weighing on the Dow were shares of 3M Co . 3M, whose products range from Post-It Notes to specialty films for computers and televisions, dropped 5.3 percent to $90.02, hurt by softness in some divisions even though its results met estimates. For details, see [ID:nN1E76O0VJ]

Among other decliners, Netflix Inc slid 6.5 percent to $263.17, a day after the movie rental company warned its red-hot subscriber growth would cool in the third quarter. [ID:nN1E76O1TN] (Additional reporting by Ashley Lau and Ryan Vlastelica, Editing by Chizu Nomiyama)

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