Stocks ended a thinly traded session mostly flat on Tuesday as investors paused after last week's surge, though continually light volume suggested the market could encounter more choppy trading.

The Nasdaq closed higher for its sixth straight day, helped by strength in Netflix, while the Dow and the S&P 500 ended five-day streaks that marked the best week for equities in two years.

The S&P gained 5.6 percent last week, rebounding from weakness over the past two months, but concerns about economic growth and the U.S. debt ceiling could temper gains in coming days.

It's no real surprise that the market is having a harder time today getting excited, given the big week we just had, said Hayes Miller, the Boston-based head of asset allocation in North America at Baring Asset Management, which oversees about $50.6 billion.

In another prospective headwind, Moody's Investors Service slashed Portugal's credit rating into junk territory on risks the country will need another bailout before it can return to capital markets. It keeps the euro zone's debt woes at the forefront even as investors were hopeful for a resolution to Greece's fiscal crisis.

Equities dipped only slightly on the news, which Luke Rahbari, partner at the Chicago-based Stutland Volatility Group, said had been expected.

This is more symbolic, he said, though he added that in the short term, everything will be pressured ... everyone wants to get out of every asset class except cash and reassess after we get more clarity.

The Dow Jones industrial average <.DJI> was down 12.90 points, or 0.10 percent, at 12,569.87. The Standard & Poor's 500 Index <.SPX> was down 1.79 points, or 0.13 percent, at 1,337.88. The Nasdaq Composite Index <.IXIC> was up 9.74 points, or 0.35 percent, at 2,825.77.

The day's volume was light, with only 6.04 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion. The trend was seen as enduring and the anemic action could exacerbate stocks' gyrations in the holiday-shortened week, especially with Friday's non-farm payroll report expected to show tepid job creation in June. Markets were closed on Monday for the U.S. Independence Day holiday.

Markets are in a highly volatile state right now, making this a difficult market to make a lot of progress in, Miller said. We're going to go back and forth with strong weeks like last week and weak ones like what we had before that.

Last week, moves to avert a debt crisis in Europe and surprisingly strong regional business data helped lift some of the gloom on Wall Street.

The Nasdaq was lifted by Netflix Inc , which surged 8.1 percent to $289.63 and hit a new high at $291.23 in intraday trading after it said it was expanding its online video service to 43 countries in Latin America and the Caribbean.

New orders received by U.S. factories bounced back in May, boosted by demand for transportation equipment, a government report showed. The 0.8 percent rise was slightly below economists' forecast.

Stocks were little affected by the data following last week's move and some traders may be betting that the S&P's rally is near an end.

A substantial August put spread was transacted in the S&P 500 Index <.SPX> on Tuesday and was followed by the purchase of a hefty August $120-$127 put spread on the SPDR S&P 500 Trust , said Frederic Ruffy, WhatsTrading.com options strategist.

Morgan Stanley's U.S. equity strategist, Adam Parker, said lower growth and inflation worries are set to drive the S&P 500 price-to-earnings ratio toward 10 within five years as anxious investors keep a lid on stock prices.

During the recent sell-off, the P/E ratio, or what investors are willing to pay for a dollar of earnings, fell to 12.7 from 13.5, according to Morgan Stanley's data. The note was dated July 4.

U.S. crude oil futures surged 2 percent to settle at $96.89 a barrel after Barclays Capital raised its forecast for the commodity in 2012, lifting the S&P energy index <.GSPE> up 0.5 percent. Marathon Oil rose 3.4 percent to $34.07.

The number or declining stocks was about even with the number of rising stocks on both the New York Stock Exchange and Nasdaq.

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)

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