NEW YORK (REUTERS) - United States (US) stocks mostly rose on Tuesday, with the S&P 500 snapping a two-session decline as the materials sector rallied, though the Dow fell on disappointing earnings by three of its components.
Trading was volatile, with the S&P fluctuating between positive and negative territory throughout the session, while the Dow moved between modest and solid losses and the Nasdaq swung between modest and strong gains.
The S&P materials index rose 0.6 per cent as one of the best performing major S&P indexes, led by a 6.6 per cent gain in Dow Chemical to US$45.93. Activist investor and hedge fund manager Daniel Loeb has taken a stake in the company and wants it to spin off its petrochemical arm.
In addition, Alcoa Inc jumped 6.8 per cent to US$12.13 following an upgrade to "overweight" from JPMorgan. The firm also lifted its price target on the aluminum company to US$15 from US$9.
Energy stocks, another group with some correlation to the pace of economic growth, advanced 0.5 per cent.
"We still think economically-sensitive stocks have room to run... Those have the potential to be long-term winners," said Mr Jeff Mortimer, director of investment strategy for BNY Mellon Wealth Management in Boston.
The Dow fell as Travelers Cos Inc, Verizon Communications Inc and Johnson & Johnson - all bellwethers for their sectors - tumbled following results.
Travelers fell 1.7 per cent to US$85 after posting a profit that beat expectations, though investors worried about the insurance provider's margins. Verizon lost 1.3 per cent to US$47.70, while J&J dropped 1.1 per cent to US$94.03 after it gave a forecast at the low end of analyst expectations.
According to Thomson Reuters data, earnings for the fourth quarter are expected to grow 7 per cent over the prior year. Of the 61 companies in the benchmark S&P index that have reported so far, about 56 per cent topped analyst expectations, below the long-term average of 63 per cent. About 71 per cent have topped revenue forecasts, above the long-term average of 61 per cent.
The Dow Jones industrial average was down 44.12 points, or 0.27 per cent, at 16,414.44. The Standard & Poor's 500 Index was up 5.10 points, or 0.28 per cent, at 1,843.80.
The Nasdaq Composite Index was up 28.18 points, or 0.67 per cent, at 4,225.76.
As the Federal Reserve has embarked on its plan to reduce stimulus, investors will closely monitor corporate profits for signs of growth. About eight companies have issued negative outlooks for every positive one, which would mark the lowest ratio on record should it continue.
"Results are running light, and negative announcements have been off the hook with very high levels of negative guidance,"said Mr Mortimer, who helps oversee about $185 billion (S$236 billion) in client assets. "The market pays a premium for growth, and the stocks that have rallied and then disappointed are susceptible to large drops almost immediately."
International Business Machines Corp turned lower in after-hours trading. The Dow component reported adjusted fourth-quarter earnings that beat expectations, but revenue was below consensus.
Cree Inc rose 4.2 per cent after the market closed after posting second-quarter revenue that topped expectations.
US-listed shares of BlackBerry Ltd were the top boost to the Nasdaq 100, jumping 9.4 per cent to US$9.93 as short-sellers bailed out of the smartphone maker. The stock is up about 33 per cent in 2014.
Delta Air Lines Inc rose 3.3 per cent to US$32.08 after it reported a higher-than-expected fourth-quarter profit, aided by lower fuel costs.
About 63 per cent of companies that trade on the New York Stock Exchange closed higher while 59 per cent of Nasdaq-listed names ended in positive territory. About 6.78 billion shares traded on all US platforms, according to BATS exchange data.