The S&P 500 has edged higher, as investors rotate into economically sensitive cyclical stocks, optimistic that Washington will deliver a new round of stimulus to sustain the US economic recovery from a pandemic-induced recession.
Financial, industrial and energy stocks gave the biggest boosts to the bellwether S&P 500 and blue-chip Dow as investors pivoted back to cyclicals.
The march upward lost steam late in the session, and a drop in tech shares pulled the Nasdaq lower on Tuesday.
The S&P 500 has moved into positive territory year-to-date, up 0.8 per cent.
The Nasdaq has gained 19 per cent since January 1, while the Dow remains down six per cent.
The S&P 500 is now within four per cent of its record closing high reached late in February.
Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, said economically sensitive areas were doing very well.
"My guess is it's because of the stimulus here and in Europe and decent earnings reports from a variety of different companies," he said.
As new infections of COVID-19 surged in the US, lawmakers on Capitol Hill wrestled to craft a new stimulus package with less than two weeks until the expiry of extended unemployment aid for millions of Americans.
"A pick-up in demand is being seen throughout the economy as things have opened up," Tuz added.
"We're at the cusp of continuing with the recovery or stagnation."
Elsewhere, the 27-member European Union reached an agreement on a massive $US857 billion pandemic recovery plan at the conclusion of a rocky, five-day summit.
The Dow Jones Industrial Average rose 159.53 points, or 0.6 per cent, to 26,840.4, the S&P 500 gained 5.46 points, or 0.17 per cent, to 3,257.3 and the Nasdaq Composite dropped 86.73 points, or 0.81 per cent, to 10,680.36.
Of the 11 major sectors in the S&P 500, seven ended the session in the black.
Energy companies rose 6.2 per cent, the largest daily jump since June 5, as crude prices climbed amid signs of rebounding demand.
Second-quarter reporting season rolled on, with 58 constituents of the S&P 500 having reported.
Of those, 77.6 per cent have come in above consensus, according to Refinitiv data.
But expectations have set a low bar. Analysts now see aggregate S&P 500 earnings for the April to June period having declined by 41.8 per cent year-on-year, per Refinitiv.
Coca-Cola shares gained 2.3 per cent after the beverage maker beat earnings estimates and said demand is improving.
Defence industrial Lockheed Martin topped quarterly consensus estimates and raised its full-year profit and revenue estimates, sending its shares up 2.6 per cent.
Tesla fell 4.5 per cent, retreating from Monday's record closing high after JPMorgan Chase downgraded the electric car maker's stock to "market perform".
Advancing issues outnumbered declining ones on the NYSE by a 3.26-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favoured advancers.
The S&P 500 posted 44 new 52-week highs and no new lows; the Nasdaq Composite recorded 126 new highs and 14 new lows.
Volume on US exchanges was 11.82 billion shares, compared with the 11.37 billion average for the full session over the last 20 trading days.
United Airlines shares rose more than one per cent in after-hours trading.
After the bell, the commercial air carrier posted an adjusted net quarterly loss of $US2.6 billion but reported improved cash burn.