Chip stocks faced selling pressure on Tuesday, pulling both the S&P 500 and the Nasdaq into negative territory as traders worked through an uneven round of quarterly earnings that included reports from several large US banks.

Among the S&P 500's sector moves, healthcare posted the steepest losses, with Johnson & Johnson's shares sliding 6.8% even after the company's quarterly earnings cleared analyst expectations. Shares in the technology sector held their ground amid an unsettled session, with prices swinging without committing to a clear direction.

Shares in memory chipmaker Micron Technology fell 4.6%, while data storage firms Western Digital and Seagate each posted declines ranging from 1% to 2%, pulling parts of the chip sector lower. A shift in market mood followed remarks by Broadcom chief executive Hock Tan, who on Monday drew a comparison between portions of capital flowing into the sector and the speculative nature of gambling. News of technological progress at China's CXMT stoked concerns about intensifying rivalry in the sector.

Gains in Apple shares, which touched an all-time peak, and a 0.9% advance for Microsoft helped absorb the broader pressure on the market. Meta's 2% advance provided a floor beneath the communication services sector, softening the broader decline recorded across the S&P 500.

Concerns about vulnerabilities in artificial intelligence technology were contributing to investor unease, according to Peter Cardillo, chief market economist at Spartan Capital Securities.

By 12:23 p.m. ET, three major benchmarks were trading in the red — the Dow Jones Industrial Average had shed 173.96 points (0.34%) to reach 51,676.77, while the S&P 500 gave back 9.38 points (0.12%) to sit at 7,798.04 and the Nasdaq Composite surrendered 38.24 points (0.14%), settling at 27,207.66. Shares of Caterpillar and Honeywell weighed most heavily on the Dow's performance.

Bank earnings reports, a collection of uneven quarterly results, drew scrutiny from market participants navigating the latest round of financial disclosures. Shares in Citigroup retreated 3.4% even as both banks cleared analyst profit forecasts, while Goldman Sachs edged up around 0.5% on the same news. Shares of Wells Fargo dropped 1.5% after the bank's net interest income came in below analyst forecasts, while JPMorgan Chase traded unevenly — alternating between positive and negative territory — after posting an unexpected shortfall in quarterly profit.

A flattening yield curve — where longer-dated returns climb at a faster pace than shorter-dated ones, reflecting elevated credit-risk concerns — put pressure on banking stocks, according to Kathleen Brooks, research director at XTB, who noted that retail-heavy US lenders such as JPMorgan and Citi had already seen those dynamics priced into their valuations ahead of any formal moves. Brooks added that broader market sentiment had drawn some support from anticipation of a healthy earnings season, even as geopolitical tensions, climbing bond yields, and inflation driven by energy costs continued to weigh on the outlook. Cardillo noted that uneven market performance was likely to persist until the earnings reporting period gained fuller momentum.

Higher oil prices stoked worries about inflation and drove bond yields toward levels not seen in years, yet a batch of US figures pointing to softer hiring and price growth below forecasts has since pulled back market expectations for a near-term rate increase. September's consumer and producer price figures, along with retail data — all due to be published this week — have attracted heightened attention as a result.

Speeches from Federal Reserve presidents Thomas Barkin and Susan Collins are set to draw attention as the afternoon session gets underway.

Shares of Bumble climbed 56% to their highest point in a year after the dating-app company reached an agreement to be taken private through a $1.3 billion transaction. Domino's Pizza stock dropped 3.8% on the day the company lowered its full-year revenue outlook.

On the NYSE, falling issues held a 1.22-to-1 edge over those that gained ground, while the Nasdaq posted a wider gap of 1.9 losers for every stock that moved higher. On the S&P 500, 14 stocks touched fresh 52-week peaks against 5 that fell to new annual lows, whereas across the Nasdaq Composite the count ran to 33 names at year-long highs and 344 at year-long lows.