Stocks slipped on Tuesday as the recent sharp run-up tempted investors to take profits while government stress test results due later this week may show about half of the banks under review need to raise more capital.

Kraft Foods helped push the Dow briefly into positive territory after the maker of household brands including Oreo cookies and Maxwell House coffee reported a higher profit. Like many companies this earnings season, Kraft said its results were helped by raising prices and cutting costs, sending its shares up 6.2 percent at $25.76.

According to a source familiar with official talks between banks and regulators, about 10 of the 19 largest U.S. banks that have been put through government stress tests will be instructed by regulators to raise more capital.

The banks have been negotiating with the regulators about the depth of their capital needs, should the recession prove to be deeper and longer than anticipated.

Investors were hopeful that the amount of capital banks need to raise will be manageable, but some jitters remain over any negative surprises that could be revealed.

The market's been looking further out than it has in a while so rather than reacting to what happens each day, it's been more banking on recovery in the second half of this year, said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

There's always the fear that the attention gets jerked back to the present by some major event, and of course there is that risk this week.

Data showed the services sector contracted less severely in April, adding fuel to sentiment that the economy may have seen a bottom.

Federal Reserve Chairman Ben Bernanke said that while the economy is on track for a recovery later this year, the pickup is likely to be sluggish and the jobless rate will likely climb further.

The Dow Jones industrial average <.DJI> was off 15.05 points, or 0.18 percent, to 8,411.69. The Standard & Poor's 500 Index <.SPX> added 4.25 points, or 0.47 percent, to 902.99. The Nasdaq Composite Index <.IXIC> slipped 16.11 points, or 0.91 percent, to 1,747.45.

Financial shares have helped lead the market up more than 33 percent from the March bear market lows, while the broad S&P 500 turned positive for the year on Monday, spurred by growing optimism about the state of the banking sector and signs the economic slump may be waning.

Among financial shares, Wells Fargo was off 5 percent to $23.03, while Citigroup gained 5.3 percent to $3.37.

The final results of the stress tests are expected to be reported on Thursday. Any news that points to more stabilization in the sector will be a positive for investors as authorities have said shoring up the financial system is key to reviving the recession-hit economy.

(Editing by Padraic Cassidy)

Ben Bernanke Citigroup