US stocks have struggled to hold on to gains as chip stocks took a beating from Samsung's profit warning and financials fell, denting optimism over US-China trade talks.
The South Korean smartphone giant surprised the market with an estimated 29 per cent drop in quarterly profit, blaming weak chip demand, less than a week after Apple made a rare sales warning.
The Philadelphia Semiconductor index fell 1.69 per cent, weighed down by losses in Nvidia, Applied Materials and Lam Research.
"Samsung is sort of a confirmation that Apple is not a standalone situation and that we could probably end up seeing some more disappointments from the technology sector," said Sam Stovall, chief investment strategist at CFRA.
Analysts now expect earnings at S&P 500 technology companies to grow 8.5 per cent in the fourth quarter, down from the estimated 13.7 per cent in October, according to Refinitiv IBES data. Earnings for S&P 500 companies overall are expected to grow 14.8 per cent.
Wall Street's main indexes rose earlier on Tuesday on hopes of progress in US-China trade talks and after the countries extended the discussions to an unscheduled third day.
"China news is helping," said Stovall. "We had a successful retest of the Christmas Eve low last Thursday and investors are piling back in because they think the worst is behind us."
Wall Street rallied in the past two sessions on the back of a strong jobs data and after the Federal Reserve chief calmed worries about interest rate hikes hurting economic growth.
Trade and concerns over slowing economic growth triggered a sell-off at the end of 2018, with Wall Street posting its worst monthly performance in about a decade in December, driving down earnings estimate and stock valuations.
Since then, the S&P 500 has climbed more than 9 per cent, with investors looking to the upcoming fourth-quarter earnings season for a clearer picture.
Adding to the woes for chip stocks, Goldman Sachs said it expects semiconductor companies to face a challenging year, particularly in the first half.
Amazon.com rose 0.7 per cent, adding to Monday's gains that helped the market power higher and the online retailer overtake Microsoft to become Wall Street's most valuable company.
Shares of trade-sensitive Boeing rose 2.7 per cent after the planemaker delivered a record 806 aircraft in 2018.
At 11.35am local time on Tuesday, the Dow Jones Industrial Average was up 83.07 points, or 0.35 per cent, at 23,614.42. The S&P 500 was up 2.31 points, or 0.09 per cent, at 2,552.00 and the Nasdaq Composite was down 2.23 points, or 0.03 per cent, at 6,821.24.
The financial sector was pulled lower by losses in Bank of America and Goldman Sachs Group.
PG&E shares fell about 8.3 per cent after S&P Global Ratings stripped the California power utility of its investment-grade credit rating and kept it under review for a further downgrade.
Advancing issues outnumbered decliners by a 1.77 to 1 ratio on the NYSE and by a 1.22 to 1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and one new low, while the Nasdaq recorded 22 new highs and 12 new lows.