Stocks gain before many fall back

Stocks rose on Tuesday, led by recently beaten down financial shares, after data showed the economy's services sector grew slightly faster than expected in May.

The pace of growth in the services sector picked up in May as a gauge of new orders improved, according to an industry report released on Tuesday. The Institute for Supply Management's services index edged up to 53.7 from 53.5 in April, a touch above economists' forecasts for it to hold steady.

However after a morning of gains in choppy trading, some stocks dipped slightly indicating some investing insecurity.

"The [equities] market is very fearful of the economic data. Even if it was in line with expectations there's a sigh of relief from many that it wasn't worse," said Peter Boockvar, equity strategist at Miller Tabak & Co in Manhattan.

"Europe's obviously a concern, but we've been selling off for weeks on that. A slightly better than expected services number, which makes up the majority of the economy, is a sigh of relief in the face of a lot of bearishness."

Traders struggled, however, to interpret statements on the outcome of emergency talks among the Group of Seven industrialized nations as they tackle a deepening euro zone crisis. The Treasury Department said G7 finance ministers "reviewed developments in the global economy and financial markets and the policy response under consideration."

Japan's Finance Minister said he told G7 members that Japan is confident in Europe's response to its problems.

By early afternoon, only the Standard & Poor's 500 index had held on to its gains. It was up 0.50 points at 1,278.7. The Dow Jones industrial average was down 10.6 points at 12,090.8, and the Nasdaq composite was off 0.18 at 2,759.8.

In the euro zone, most major economies are now in various states of decline, according to business surveys that suggested even Germany is no longer immune to the crisis.

The S&P 500 was flat for the day on Monday, after a steep decline last week, as investors weighed low prices against the backdrop of Europe struggling with debt and stalling economies.

"Valuations are extremely attractive, dividend yields compared to Treasuries are at [multiyear] highs, but the global macro overhang can certainly create another down step in the short term," said Oliver Pursche, president at Gary Goldberg Financial Services in upstate Suffern.

The S&P financial sector rose 1.5 percent to lead gains. The sector is down more than 12 percent since the start of May.