NEW YORK (CNN/Money) - U.S. stocks see-sawed in fairly volatile trade as investors worked to hold on to the previous session's sharp rally amid congressional hearings on Enron and the telecom sector, and following a weak consumer confidence report.

The Nasdaq composite added 8.94, or 0.67 percent, to 1,344.19. The Standard & Poor's 500 index gained 3.82, or 0.42 percent, to 902.78. But the Dow Jones industrial average lost 31.85, or 0.37 percent, to end the day at 8,680.03; the average had gained more than 1,000 points in the prior four sessions.

"I think people are starting to accept that we're in a bear market and I think now they are viewing the news differently, like negative consumer sentiment," Stephen Murphy, an associate director at Institutional Direct, told CNNfn's Street Sweep. "Most people I speak to think we still have a ways to go on the downside, but how far is hard to say."

After the close of trade, computer hardware maker IBM (IBM: up $0.61 to $71.79, Research, Estimates) said it will pay $3.5 billion for PriceWaterhouseCoopers' consulting business. Also after the bell, chip-gear maker KLA-Tencor (KLAC: up $1.43 to $40.34, Research, Estimates) said that it earned 23 cents per share in its June quarter, down from the 67 cents it earned a year earlier, but 3 cents better than expected.

Among the companies due to report quarterly results Wednesday are: telecom Verizon Communications (VZ: down $0.23 to $30.20, Research, Estimates), online retailer Priceline.com (PCLN: down $0.04 to $1.84, Research, Estimates) and retailer Jones Apparel (JNY: up $0.25 to $34.51, Research, Estimates).

An initial reading on gross domestic product in the second quarter and a regional survey of manufacturing activity in July are the main economic reports expected.

Gains in biotech and select techs kept the Nasdaq afloat Tuesday, but declines in DuPont (DD: down $1.90 to $42.05, Research, Estimates), Coca-Cola (KO: down $1.28 to $48.15, Research, Estimates) and 3M (MMM: down $1.17 to $125.49, Research, Estimates) pressured the Dow.

Reminding investors of the accounting fears that have slowed markets for months, a congressional committee was grilling Merrill Lynch (MER: up $0.25 to $36.50, Research, Estimates) executives Tuesday on their potential involvement in the collapse of bankrupt energy trader Enron.

Merrill Lynch denied any wrongdoing and said it was not aware of Enron's true financial state, a claim made by sector mate J.P. Morgan Chase (JPM: down $0.21 to $24.89, Research, Estimates) late Monday. Citigroup (C: up $0.64 to $33.95, Research, Estimates) has also denied any wrongdoing in its dealings with Enron.

President Bush signed a corporate reform bill Tuesday that will impose stricter penalties on those who commit corporate fraud, among other things.

Another factor in the session was the Conference Board's index on consumer confidence in July, which showed a decline to 97.1 versus a revised 106.3 in June. Economists surveyed by Briefing.com were expecting a reading of 101.5 for a month in which the Dow fell to its worst levels in almost four years, and the Nasdaq and S&P hit more than five-year lows.

"We're giving back a little, but you need to put it in perspective," said Bryan Piskorowski, a market analyst at Prudential Financial. "The Dow lost 1,700 points from July 5 to last Wednesday, and then made up north of 1,000 in four days. So a little profit-taking, particularly when you've got weak consumer numbers and other factors, is certainly no surprise."

One reason the Nasdaq was able to outperform the Dow: Salomon Smith Barney raised its 12-month stock price target on No. 1 biotech Amgen (AMGN: up $1.47 to $45.49, Research, Estimates) to $55 from $50, saying that the fundamentals have never been stronger and that the company has the best near-term product portfolio.

Morgan Stanley upgraded JDS Uniphase (JDSU: up $0.38 to $2.50, Research, Estimates) to "overweight" from "equal-weight" within a very lukewarm note on the fiber-optic network gear maker.

Positive reports out of a SoundView Technology storage tech conference also may have helped techs recover some losses.

According to Briefing.com, Dell Computer (DELL: up $0.64 to $25.09, Research, Estimates) made some positive comments regarding its relationship with data storage specialist EMC (EMC: up $0.25 to $7.90, Research, Estimates) and said it's comfortable with current gross margin forecasts. In addition, business software maker Veritas Software (VRTS: up $0.79 to $19.01, Research, Estimates) made a positive presentation at the same conference.

"On the upside, the buyers are stepping back in and it isn't just all sellers," said Prudential Financial's Piskorowski. "We're seeing buying in gold stocks, energy, semiconductors and other oversold names. There's also a lot of economic data coming down the pipe in the next few days and that should give us more to chew over."

A separate Senate hearing Tuesday addressed the financial turmoil in telecom, focusing on such issues as the decline of WorldCom and Global Crossing and the current investigation of Qwest Communications (Q: down $0.20 to $1.29, Research, Estimates).

Also affecting the telecom sector: Moody's and Standard & Poor's cut their debt rating on fiber-optic products maker Corning (GLW: down $0.68 to $2.47, Research, Estimates) to "junk" status late Monday.

And AT&T (T: up $0.26 to $10.00, Research, Estimates) and AOL Time Warner (AOL: up $0.82 to $12.40, Research, Estimates), parent of CNN/Money, announced that they have agreed to temporarily stop discussing a potential change of ownership in the cable and entertainment holdings they co-own.

"The question is how far can this particular rally go?" said John Hughes, a market analyst at Shields & Co. "There's no big stock leader and there isn't really anything fundamental that is creating the rally. It's really just a bounce off of oversold conditions. We can certainly continue to bounce for a while, but how far this can carry is up in the air."

European markets closed lower, while Asian-Pacific stocks followed up on the U.S. advance Monday, closing higher.

Treasury prices fell modestly, pushing the 10-year note yield up to 4.58 percent from 4.56 percent. The dollar was a little lower versus the euro and the yen.

Light crude oil futures rose 81 cents to $27.36 a barrel. Gold added $1.50 to $306 in U.S. trade.

Market breadth was positive. On the New York Stock Exchange, advancers edged decliners as 1.81 billion shares changed hands. On the Nasdaq, winners edged losers 9-to-8 as 1.68 billion shares traded.