The Nasdaq Composite fell on Tuesday as Google's parent Alphabet tumbled on a revenue miss. The tech-heavy index slid 0.7% after reaching an all-time high in the previous session.
The rest of the market inched higher with the Dow Jones Industrial Average adding 38 points to 26592.91 and the S&P 500 climbing 0.1% to a new record.
Alphabet fell 7.5% Tuesday, posting its worst day since October 2012 after reporting revenue of $36.34 billion in the first quarter, versus $37.33 billion expected. The weaker revenue was driven by the decelerating ad sales growth at Google, the company said.
"We acknowledge the uncertainty around the effectiveness of ad product improvements and continued limited transparency company wide, but we also believe there remains multiple monetization opportunities ahead," JMP Securities analyst Ronald Josey said in a note.
Other stocks had more positive reactions to earnings, however, lifting the rest of the market.
Dow-component McDonald's posted quarterly earnings and revenue that topped analysts' expectations. Global same-store sales grew 5.4% in the first quarter, more than the 3.4% increase analysts expected, as the burger chain ramped up its promotion programs. The company's stock rose 0.23%.
General Electric reported better-than-expected first-quarter earnings Tuesday, sending its shares up 4.6%. The company also reaffirmed its guidance for 2019 and signaled it was burning less cash than expected.
Earnings report card
More than half of the S&P 500 companies have reported so far and 77% of them have topped analyst expectations, according to Refinitiv. If all remaining companies report numbers in line with estimates, earnings growth will be up 0.7% year over year, which contrasts the 2% decrease expected as recently as April 1.
"Earnings sentiment has improved in April, with a slight bias towards upward revisions," Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note on Monday. "The macro backdrop/underlying demand were simply not nearly as bad as feared in 1Q19... We think Corporate America did everything within its powers in 1Q19 to support earnings growth and defend margins."
Dow-member Apple is slated to report earnings after the bell Tuesday. Its shares traded down nearly 2% ahead of the release.
Investors also digested the latest development on the trade front. White House chief of staff Mick Mulvaney said Tuesday the Trump administration's trade talks with China will be resolved within the next two weeks.
This week's focal point will be the Federal Reserve's policy decision and press conference on Wednesday. Fed watchers will be closely monitoring if the central bank changes its dovish tone and how it plans to proceed with its balance sheet reduction program.
"Their goal is going to be to move away from the limelight and be on hold for the rest of the year," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. "My guess is a stable Fed leads to more stable markets. Maybe risk assets keep grinding higher at this point."
The fed funds futures market is seeing no rate hikes coming this year, while assigning a 57 percent probability of at least one rate cut by Dec. 11, according to the CME's FedWatch tool.
— CNBC's Silvia Amaro contributed to this report.