Stocks Recover to End Flat; Facebook Logs Gain

Stocks clawed back from steep losses to finish narrowly mixed Wednesday following several reports on the euro zone that helped soothe fears over the region's debt crisis.

Italian Prime Minister Mario Monti and French President Francois Hollande agreed to consider all measures to boost European economic growth, including eurobonds, according to a report.

Meanwhile, traders speculated that European Central Banks may be making plans to backstop the euro zone should the crisis worsen.

“The commentary around the euro zone remains bearish,” said Kenny Polcari, managing director at ICAP Equities. “Central banks will eventually come together and throw more money at the issue.”

After-Hours Stocks to Watch: HPQ, FB, P & More

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The Dow Jones Industrial Average slipped 6.66 points, or 0.05 percent, to close at 12,496.15, after being down more than 190 points at its session low. H-P and Intel led the laggars, while BofA rallied.

The S&P 500 added 2.23 points, or 0.17 percent, to end at 1,318.86. The Nasdaq rose 11.04 points, or 0.39 percent, to finish at 2,850.12. The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed near 22.

Among the key S&P sectors, utilities ended lower, while materials ended higher.

All three major averages had been sharply lower for most of the session amid jitters over a possible Greek exit from the euro zone and ahead of an informal EU summit in Brussels. Even some European officials said euro zone countries will have to prepare a contingency plan if Greece eventually leaves.

“This is a market that’s nervous over the deteriorating situation in Greece and Europe and waiting for a policy response that can assuage fears,” said Quincy Krosby, market strategist at Prudential Financial.

The euro fell below $1.26, hitting its lowest against the dollarsince July 2010. European stocks fell sharply, reversing a two-session recovery rally. The German 30-year bund yield tumbled below 2 percent for the first time ever.

And oil prices slumped to seven-month lowswith U.S. light, sweet crude settling below $90 a barrel.

Investors were rattled in the previous session after Greece's former Prime Minister Lucas Papademos said the risk of Greece leaving the euro is real, and that an exit would have "catastrophic" economic consequences for Greece and the rest of the euro zone. However, he later clarified to CNBC that no exit preparations were underway.

Doom & Gloom Overseas 2:21 PM ET Wed, 23 May 2012

Facebookended higher, recovering some losses from the last two trading sessions. Needham initiated coverage of the firm with a "buy" rating and a $40 price target. (Read More: Morgan Stanley Under Review Over Handling of Facebook)

Meanwhile, the NYSE is courting a stock listing from Facebook, according to reports, following a disappointing IPO on rival Nasdaq's trading platform last week. The NYSE denied the report, while the Nasdaq and Facebook declined to comment.

Dell plunged after the IT giant forecast disappointing second-quarter revenue as U.S. and European corporate tech spending weakens and consumer personal computer sales continue to shrink. At least nine brokerages slashed their price target on the firm. Other tech companies traded lower, including Microsoft , AMD and JuniperNetworks .

Rival Hewlett-Packard is scheduled to post after the closing bell tonight. The Dow component is also expected to announce steep layoffs during its earnings report.

Toll Brothers rallied after the luxury homebuilder posted earnings that beat expectationsand reported a strong jump in new orders, thanks to a strong spring selling season.

Guess jumped after the clothing maker reported a quarterly profit that beat market expectations. And PetSmart surged after the pet products retailer posted a better-than-expected quarterly profit and raised its full-year outlook. At least nine brokerages boosted their price target on the firm.

Ford received its second "investment grade" credit rating, allowing the second-largest U.S. automaker to reclaim its Blue Oval insignia and other assets it mortgaged in 2006 to fund its turnaround plan.

Meanwhile, Ariba eked out a small gain after European software company SAP said it plans to buy the companyin a deal valued around $4.3 billion, the latest sideswipe against rival Oracle in the fast-growing Internet-based computing market.

On the economic front, new home sales rose 3.3 percent to a seasonally adjusted 343,000-unit annual rate in April, according to the Commerce Department, beating expectationsfor a 335,000-unit reading.

Treasurys prices held near session highsafter the government auctioned $35 billion in 5-year notes at a high yield of 0.748 and bid-to-cover of 2.99.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

THURSDAY: Durable goods orders, jobless claims, 7-yr note auction, BlackRock shareholders mtg, Goldman Sachs shareholders mtg, McDonald's shareholders mtg; Earnings from Costco, Tiffany
FRIDAY: Consumer sentiment, USDA food prices outlook

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PETM		---
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Stocks Recover to End Flat; Facebook Logs Gain

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