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Much like

Monday, Tuesday was a day of relatively light trading volume that pulled down major stock proxies.

However, stocks were quite volatile compared with the prior day's relatively subdued session. After falling early on Tuesday, shares rallied furiously at midday, peaked about two hours later and then proceeded to tumble back toward session lows. With about 30 minutes remaining in the trading day, stocks began to bounce back.

When all was said and done, the

Dow Jones Industrial Average

was down 0.1% to 8474.78 after trading as low as 8405.12 and as high as 8546.84. The

S&P 500

slid 0.4% to 896.74 vs. its morning low of 893.09, while the

Nasdaq Composite

closed off 1.4% to 1374.50, compared with its nadir of 1367.80 and high of 1394.90.

The intraday volatility was fostered in part by another session of relatively lackluster volume. About 1.2 billion shares traded on the

New York Stock Exchange

, where declining stocks bested advancers by an 18-to-13 spread. In Nasdaq trading, almost 1.3 billion shares traded, and decliners led by 18 to 13 as well.

Looking for Direction

After rallying furiously from Oct. 9 to Nov. 6, the market has mainly been spinning its wheels. Tuesday's session was another example of how bulls were unable to push their advances, but skeptics were similarly unable to sustain substantial downward pressure. It seems as if market participants are waiting for something to spur a major move in either direction, be it a breach of some significant technical resistance or support level, a major geopolitical development (i.e., the outbreak of war with Iraq or another terrorist attack), or significant economic or corporate news.

On the macro front Tuesday, the government reported that the consumer price index rose 0.3% in October, while the core rate rose 0.2%. Because both levels were in line with expectations, most market participants interpreted the data to mean that inflation remains quiescent. Notably, the price of the benchmark 10-year note, which is very sensitive to inflation, rose 5/32 to 100 6/32, its yield falling to 3.98%.

Still, those

TheStreet Recommends

concerned about inflation observed that the CPI is now rising 2% on a year-over-year basis vs. its cyclical low to date of 1.1% annual growth in June.

Nevertheless,

Federal Reserve

officials continue to focus on disabusing investors of the notion that deflation is a threat. Following up on

last week's comments from Fed Vice Chairman Roger Ferguson, Richmond Fed President Al Broaddus Tuesday said deflation "is not a clear and present danger," though he conceded "the economic mood of the country is quite pessimistic."

Separately, Fed Chairman Alan Greenspan detailed how the Fed could do a lot of things to combat deflation, even if the fed funds rate were at zero, most notably engaging in open-market operations to buy Treasuries. Such comments got the "Plunge Protection Team" conspiracy hounds up in arms, but the bottom line is that they represented nothing new -- he said as much last week before Congress.

As discussed in

RealMoney.com's

Columnist Conversation, there's a debate on Wall Street over whether the Fed's efforts to allay market participants' fears about deflation are unwittingly fueling them. The notion that the Fed "doth protest too much" about deflation has been widely heard, even if not in such Shakespearean tones.

However, it's notable that after a brief flurry, the market's reaction to Greenspan's comments was muted, and that was sort of a microcosm for the overall session.

Inside the Indices

The Comp's relative weakness, a break from recent trends, largely reflected its biggest component,

Microsoft

(MSFT) - Get Microsoft Corporation Report

, which fell 2.2% following a Raymond James downgrade. Similarly,

Amazon.com

(AMZN) - Get Amazon.com, Inc. Report

shed 5% following a downgrade by Bear Stearns.

Tech proxies were also harmed by some cautious comments on information-technology spending from

EMC

(EMC)

, which declined 9.5%, as well as a 14.4% drop in

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

, which filed to sell $300 million of convertible notes. The Merrill Lynch High-Tech 100 lost 2.2% and the Philadelphia Stock Exchange Semiconductor Index slid 2.3%.

Blue-chip proxies were further dampened by renewed weakness in retailing stocks following weak outlooks from

Home Depot

(HD) - Get Home Depot, Inc. Report

, which lost 12.4% and was by far the largest drag on the Dow, as well as

BJ's Wholesale Club

(BJ) - Get BJ's Wholesale Club Holdings, Inc. Report

, which slid 17%. Additionally, CIBC Oppenheimer downgraded several specialty retailers, including

Circuit City

(CC) - Get Chemours Co. Report

, which lost 5.6%, and

Children's Place

(PLCE) - Get Children's Place, Inc. Report

, which fell 9.7%.

The S&P Retail Index fell 2.8% after Bank of Tokyo-Mitsubishi said overall same-store sales fell 1.2% for the week ended Nov. 16.

Finally,

AT&T

(T) - Get AT&T Inc. Report

shares fell 1.8% after the firm executed a 1-for-5 reverse stock split after completing the sale of its cable TV unit to

Comcast

(CMCSA) - Get Comcast Corporation Class A Report

, which fell 5.7%.

Major averages were buoyed by modest strength in financial names, such as

American Express

(AXP) - Get American Express Company Report

, and drugmakers, such as

Merck

(MRK) - Get Merck & Co., Inc. Report

. The Philadelphia Stock Exchange/KBW Bank Index rose 0.3% and the Amex Drug Index gained 0.6%.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.