Shortly after U.S. stock markets closed, the Slovakian parliament rejected a bill to strengthen the powers of a regional rescue fund. The sixteen other countries that use the euro have already signed off on the bill, but the measure requires unanimous support.
There are ways around Slovakia's opposition, but the move complicates efforts to address Europe's debt jam, which has been the most important issue for financial markets for months. Investors worry that if Europe doesn't contain its debt crisis, a default by the Greek government could deliver a devastating blow to European banks and cause them to freeze up lending.
The Dow Jones industrial average ended down 18 points after moving between small gains and losses throughout the day. The index traded within a range of only 82 points, the narrowest since July 20. The relatively tepid trading came a day after the Dow surged 330 points, its largest increase since Aug. 11.
"I think markets want to say 'who cares about Slovakia,' but the reality is every little country has to agree," said Randy Warren, investment strategist at Exton, Pennsylvania-based firm Warren Financial Service.
Greece has been on the brink of defaulting on its debt for months. If that happens, it would hurt European and U.S. banks by decimating the value of Greek government bonds they own. Those banks would then be less likely to lend to each other and to businesses. That could plug up an already weak global economy, with implications for everything from bank stocks to international trade.
The Dow lost 16.88 points, or 0.1 percent, to close at 11,416.3. The Standard & Poor's 500 index rose 0.65 point, or 0.1 percent, to 1,195.54 The Nasdaq composite rose 16.98, or 0.7 percent, to 2,583.03.
Aluminum maker Alcoa Inc. plunged 5.6 percent in after-hours trading after reported that its earnings slumped from the previous quarter, suggesting demand from Europe has slowed.
Markets have been swinging wildly since early August, when Europe's economy suddenly seemed closer to the brink of collapse.
Moves of more than 100 points for the Dow have become commonplace as traders react swiftly to every whiff of news coming out of Europe. The S&P 500 is up 8.8 percent since last Tuesday, when it traded 20 percent below its April peak. Had the S&P closed at that level, it would have put the index into what analysts call a bear market. The index is still down 5.1 percent for the year.
Many market watchers think the volatility will continue until heavily indebted countries like Greece, Spain and Italy have established a clear path out of their current debt mess. Some hope that the summer's heavy selling may have reflected the worst of the market's fears.
"It appears that barring an uncontrolled meltdown, the bottom is in," said Warren.
In corporate news, Dollar Thrifty Automotive Group Inc. fell 2 percent after the car-rental company said it was taking itself off the market after failing to get acceptable takeover proposals from Hertz or other companies.
Discount retailer 99 Cents Only Stores Inc. rose 4.4 percent. Ares Management LLC and the Canada Pension Plan Investment Board have offered to buy the company for $22 per share in cash, a 7 percent premium from Monday's closing price.
Alcoa is the first company in the Dow Jones industrial average to report third-quarter results. Many analysts hope that the upcoming wave of corporate earnings reports will pull investor focus away from Europe and back to the health of U.S. corporations.
Analysts expect earnings from S&P 500 companies to rise about 12 percent from the same period last year, according to data provider FactSet. Revenue is expected to rise 11 percent. Investors are concerned not only with companies' performance over the last quarter but what they expect to earn over the next year. A series of gloomy forecasts could compound fears that the country could enter another recession.