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Dow, S&P close lower on earnings; biotech boosts Nasdaq for 2nd day of gains

U.S. stocks closed mixed on Tuesday, mostly failing to hold momentum from Monday, as investors reacted to individual earnings reports of major companies.

"I think investors are conflicted with the earnings picture better on the earnings front, a little weaker on the revenue front, without hard economic data to quake them," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "We have insufficient energy to break through to new highs."

Stocks opened higher but soon pared gains. The Dow Jones industrial average briefly fell more than 100 points in afternoon trade, weighed by Travelers' miss on both the top and bottom lines, FX headwinds on DuPont's earnings and IBM's continued decline in revenue. The S&P 500 also fell into negative territory, with energy and utilities lagging.

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The Nasdaq closed 0.40 percent higher to post its second consecutive day of gains. Facebook extended gains by about 1 percent ahead of its earnings report on Wednesday after the bell. The iShares Nasdaq Biotech ETF (IBB) rose nearly 2 percent.

"This kind of bifircation is extremely healthy," said Art Hogan, chief market strategist at Wunderlich Securities. "What does this tell us? People are buying stocks. They're not buying markets."

When the major averages move together, that indicates more of a risk-on or risk-off trade, Hogan said.

Health care led advancers in the S&P 500. In more merger and acquisitions in the sector, generic drugmaker Teva announced an $82 per share offer for Mylan on Monday.

The major indices are little changed from their levels one month ago.

It indicates there's resistance at higher levels and "some distribution going around," said Peter Cardillo, chief market economist at Rockwell Global Capital.

The corporate reports are a mixed bag, as analysts said the tendency of companies to beat on earnings but miss on revenue is a long-term negative.

"I think the trend is clear. The strong dollar and mediocre global growth are having an impact," said Peter Boockvar, chief market analyst at The Lindsey Group.

DuPont earned an adjusted $1.34 per share for the first quarter, 5 cents above estimates, though revenue was below forecasts. DuPont said quarterly results were impacted negatively by 25 cents from the stronger dollar. Additionally, DuPont also announced an increase in its quarterly dividend by 4 percent to 59 cents per share.

United Technologies beat estimates by 13 cents with adjusted quarterly profit of $1.58 per share, with revenue slightly below forecasts. UTC said it had a good start to the year despite ongoing headwinds from currency effects.

Kimberly-Clark reported adjusted quarterly profit of $1.42 per share, 9 cents above estimates, with revenue also above forecasts. The personal care products maker also warned that currency effects will cut its 2015 operating profit by 10 to 11 percent.

Verizon beat forecasts by 7 cents with quarterly profit of $1.02 per share, though revenue fell slightly short. Verizon's wireless operation also added 565,000 subscribers in the quarter compared to a year earlier.

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IBM reported adjusted quarterly profit of $2.91 per share, 11 cents above estimates. Revenue was essentially in line with estimates, though it did fall for the 12th straight quarter as IBM continues its transformation toward cloud-based businesses.

Hormel said its turkey supply chain has been significantly disrupted due to avian flu outbreaks in Minnesota and Wisconsin. Hormel is sticking with its prior fiscal 2015 earnings guidance, but did say it expects results toward the lower end of its projected range.

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Amgen, Yahoo, Chipotle Mexican Grill, Discover Financial, Illumina, Yum Brands, Cree, iRobot report after the bell.

Oil continued to trade near highs amid futures expiration on Tuesday afternoon and continued concerns about tension in Yemen. Crude oil futures settled down $1.12, or 1.99 percent, at $55.26 a barrel on the New York Mercantile Exchange. Brent oil traded near $62 a barrel.

WTI futures for May roll over to June around 3:00 p.m. ET.

The Dow Jones Industrial Average closed down 85.34 points, or 0.47 percent, at 17,949.59, with Cisco and Visa leading advancers and Travelers and DuPont the greatest laggards .

The S&P 500 closed down 3.11 points, or 0.15 percent, at 2,097.29, with energy the greatest of seven laggards and health care leading advancers.

The Nasdaq closed up 19.50, or 0.39 percent, at 5,014.10.

Advancers were a touch ahead of decliners on the New York Stock Exchange, with an exchange volume of 677 million and a composite volume of 3.2 billion as of 4:05 p.m.

Gold futures settled up $9.40, or $1,203.10 an ounce.

The U.S. 10-year Treasury yield edged higher to 1.91 percent. The U.S. dollar held steady against major world currencies, with the euro above $1.07.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.

U.S. stocks closed sharply higher on Monday, after China's central bank announced unexpected stimulus measures.

On Monday, New York Fed President William Dudley reiterated cautious optimism on U.S. economic growth and said the central bank will remain data dependent. However, he expects inflation will begin to firm and hopes to tighten policy later this year.

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"Dudley's speech yesterday morning sort of set the tone for the week," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management. "Investors believe the Fed is going to remain very accommodative. It may be a 'one and done' (rate hike)."

On Tuesday, Asian and European markets rose as investors reacted to a slew of corporate earnings reports.

Reuters and CNBC's Peter Schacknow contributed to this report

On tap this week:

Tuesday

Earnings: Amgen, Yahoo, Broadcom, Chipotle Mexican Grill, Discover Fincl., Intuitive Surgical, Stryker, VMWare, Yum Brands

Wednesday

Earnings: Boeing, Coca-Cola, McDonald's, AT&T, Facebook, eBay,Petrobras, Qualcomm, F5 Networks, Six Flags, Ryder System, Angie's List, T. Rowe Price, Abbott Labs, EMC, Bank of NY Mellon, St. Jude Medical, DR Horton, Texas Instruments, Cheesecake Factory, Xilinx,SLM, Raymond James

9:00 am: FHFA home prices

10:00 am: Existing home sales

Thursday

Earnings: 3M, Amazon.com, Google, Microsoft, Altria, Caterpillar, Dow Chemical, General Motors, Pepsico,Procter and Gamble, Novartis, Eli Lilly, Union Pacific, Hershey, Freeport-McMoRan, KKR, Domino's Pizza,Johnson Controls, PulteGroup, Dunkin Brands, Raytheon,Starbucks, Capital One, Juniper Networks, Newmont Mining,Southwest Airlines, Pandora

8:30 am: Initial claims

9:45 am: Manufacturing PMI

10:00 am: New home sales

Friday

Earnings: Biogen, AstraZeneca, American Airlines Group, Cabot Oil and Gas, State Street, Xerox, A.O. Smith, Tyco

8:30 am: Durable goods

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