Stocks cut losses, close mixed: Dow down, Nasdaq up

Stocks cut earlier sharp losses and closed mixed Tuesday as global economic concerns weighed on the markets.

U.S. stocks initially followed global markets lower as Chinese markets plummeted and Greece saw one of its worst trading days in decades. European stocks? They got smacked, too.

But tech stocks rallied later in the day as the Nasdaq turned positive and the S&P 500 closed flat.

The Dow Jones industrial average fell for a second straight day, closing 51.28 points lower, or 0.3%, to 17,801.20. The Standard & Poor's 500 index fell 0.49 to 2059.82.The Nasdaq composite index gained 25.77 points, or 0.5%, to 4766.47.

Oil prices rebounded slightly after Monday's 4% drop. The January contract for crude oil rose 70 cents, or 0.7%, to $63.74 a barrel.

Overseas, Asian markets plunged as Hong Kong's Hang Seng index tumbled 2.3% to 23,485.83 and mainland China's Shanghai composite index plunged 5.4% to 2856.27. Tokyo's Nikkei 225 index dropped 0.7% to 17,813.38.

The plunge in Chinese stocks comes as the Chinese government set new restrictions on collateral for short-term collateralized loans, called repurchase agreements. By limiting the types of bonds that can be used as collateral, the government made those loans more difficult to get, and more expensive.

The Chinese government also extolled the virtue of slower economic growth, a signal that it expects the economy to grow less quickly in the future.

"Debt to GDP in China has seen a massive increase as the Chinese central government has internalized on its books the problems that occurred in the private sector," Rupal Bhansali, chief investment officer of international equities at Ariel Investments, said at Paste BN's 19th annual Investment Roundtable on Friday.

Exchange-traded funds that invest in China tumbled in premarket trading. For example, iShares FTSE China 25 Index Fund (ticker: FXI) fell 3.14%. Traditional open-ended funds won't price until the U.S. market closes at 4:00 p.m.

In Europe, Britain's FTSE index fell 2.1% to 6529.47 and Germany's DAX dropped 2.2% to 9793.71. France's CAC 40 tumbled 2.6% to 4263.94.

Greek stocks, not to be outdone, tumbled a whopping 11.2%, following the government's decision to call elections, leaving open the possibility that the radical Syriza party might win.

U.S. stocks fell Monday as the Dow tumbled more than 100 points.