But earnings news has been better than expected, with not a high number of beats, but the beats have more than doubled their long-term average of about 3 percent, according to Thomson Reuters.
Binky Chadha, chief global strategist asset allocation at Deutsche Bank, said earnings are recovering to the point where they should show positive comparisons next quarter and could potentially this quarter if they continue strong enough. He expects, however, to see earnings decline by 1 to 1.5 percent compared to a more than 6 percent decline in the first quarter.
As of Monday, results of the actual companies reporting blended with estimates for those S&P companies yet to report showed earnings are down more than 3 percent for the quarter so far, according to Thomson Reuters data.
"Yes, earnings growth is zero, and it might still be a little bit negative, but what it's pointing to is a very sharp V-shaped recovery taking hold," Chadha said. "You should be getting in earnings a pretty significant inflection."
Chadha said two factors that were weighing on earnings — weak oil and a strong dollar — are fading. He said oil's recent fall is not a concern, since he views fair value for oil at $41 to $42 per barrel. "We think oil prices from here are very sustainable," he said.
Tuesday is also the second day of the Democratic Convention. The race between Democrat Hillary Clinton and Republican candidate Donald Trump has become a much closer call after the Republican Convention.
"Around close elections, the market has at some point in September, the market just flattens out, and pretty much regardless of the party who wins, the market has rallied" after the election, said Chadha, pointing to historic data going back to World War II.
If the polls were pointing heavily to one candidate or the other, the S&P 500 historically has trended up, and the election was a nonevent, he said. This time, however, things are in flux and there could be rising uncertainty in September as the election gets closer, he said.
As for data Tuesday, there is S&P/Case-Shiller home price data at 9 a.m. and new home sales at 10 a.m. Consumer confidence is reported at 10 a.m.
The Fed releases its post-meeting statement Wednesday afternoon, so some trading has been subdued ahead of that. The Fed is not expected to take action.
"I'm very much of the view that low monetary policy rates are really a tax, not a stimulus. I would like to see them move sooner, rather than later, but they continue to be very dovish. Our house view on the Fed is they do nothing this week and signal very little this week," he said. Chadha said while economic data is surprising on the upside, it could motivate the Fed later this year.
"The slowdown in the U.S. began with manufacturing, and manufacturing has been recovering for six months," he said. The surprise data suggest the Fed could raise rates in September if it chose, he noted.
Earnings are expected from Dow stocks 3M, Caterpillar, DuPont, McDonald's, Verizon and United Technologies ahead of the opening. BP, Eli Lilly, Freeport-McMoRan, Under Armour, Valero Energy, Reynolds American and Tegna also report before the bell, among others.
Besides Apple, afternoon reports are expected from Juniper Networks, Buffalo Wild Wings, Panera Bread, iRobot, Ameriprise, Anadarko Petroleum, Chubb, Citrix, Akamai, Match Group, TransUnion, U.S. Steel and Equity Residential.
At 1 p.m., there is a $34 billion five-year note auction, following Monday's disappointing two-year auction.