* Tesla Motor shares in spotlight ahead of earnings aftermarket close
* U.S. service sector growth quickens in Oct -ISM
* Indexes: Dow flat; S&P down 0.1 pct; Nasdaq up 0.2 pct
By Angela Moon
NEW YORK, Nov 5 (Reuters) - U.S. stocks seesawed betweenmodest gains and losses on Tuesday following two days of gainson Wall Street as investors weighed the implications of strongeconomic data for the path of monetary policy over the nextseveral months.
The Dow Jones industrial average erased its earlier lossesto trade flat in late afternoon trade, led by Cisco Systems, up 2.7 percent at $23.18.
The Institute for Supply Management said its services indexrose a point to 55.4 in October despite a partial governmentshutdown during the first half of the month. The reading came inhigher than September's 54.4, handily beating expectations for aslight deceleration.
Investors are scrambling to measure the impact of strongdata on the Federal Reserve's decision to keep pumping $85billion monthly into the economy in the form of bond purchases.This Fed stimulus has been instrumental in spurring a rally thathas set the S&P 500 on course toward its best year in a decade.
The Fed has stressed its decision to change the level ofstimulus is data dependent. Once the economy is strong enough,it has said it may begin to withdraw its massive bond purchases.
"Despite the bounce at the beginning of this week, equitymarkets likely need further consolidation, pullback before amore meaningful upside rally can develop given short-termindicators remain overbought," said Robert Sluymer, analyst atRBC Capital Markets in New York.
Shares of Tesla Motors were up 1.6 percent at$177.95 ahead of its earnings report after the closing bell.
The Dow Jones industrial average was up 2.20 points,or 0.01 percent, at 15,641.32. The Standard & Poor's 500 Index was down 1.81 points, or 0.10 percent, at 1,766.12. TheNasdaq Composite Index was up 8.30 points, or 0.21percent, at 3,944.89.
On the New York Stock Exchange, declining stocks werebeating advancers by 19 to 10, while on the Nasdaq declinersbeat advancers by 14 to 11.
According to Thomson Reuters data, of 404 companies in theS&P 500 that have reported results through Tuesday morning, 69.6percent have topped Wall Street's expectations, above thelong-term average of 63 percent. However, just 53.3 percent beatrevenue forecasts, below the 61 percent average since 2002.
Michael Kors Holdings gained 6.5 percent to $79.68after the luxury apparel retailer reported abetter-than-expected 40 percent jump in quarterly revenue.
GT Advanced Technologies jumped more than 20percent to $10.10 after it said Apple will open amanufacturing facility in Arizona in partnership with themineral crystal specialist to make sapphire materials forApple's electronic devices.
CVS Caremark advanced 2.5 percent to $63.51 afterthe drugstore operator and pharmacy benefits manager posted ahigher-than-expected quarterly profit and raised its forecastfor the year.
Tenet Healthcare was the worst performer on the S&P500, down 10 percent to $43.50 after its third-quarter netincome slid from a year earlier.
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