By Caitlin Ostroff and Joanne Chiu 

U.S. stocks gave up modest early gains after major indexes hit records a day earlier and investors readied for a slew of blue-chip earnings.

The S&P 500 slipped 0.1% after hitting a new intraday record of 3870.90 in morning trading. The technology-focused Nasdaq Composite index also fell 0.1% higher. The Dow Jones Industrial Average edged down less than 0.1%.

This week marks the height of earnings season, with shares of General Electric rallying 4.3% after the industrial conglomerate reported forecast-beating fourth-quarter revenue and free cash flow.

Johnson & Johnson rose 3% after it recorded stronger sales in its latest quarter, as revenue gains from its pharmaceutical division boosted its top-line results. Raytheon Technologies jumped 3.4% after the aerospace and defense company reported fourth-quarter profit and revenue that beat expectations.

Starbucks, Microsoft and Texas Instruments will release results after markets close. Major tech firms, including Apple, Tesla and Facebook, will update investors Wednesday.

Investors will watch to see if earnings can continue to top analysts' expectations, providing a further catalyst to push markets higher.

"What's working in the market's favor is the overall trend of economic growth is still robust and that's likely to translate to positive earnings," said Shoqat Bunglawala, head of multiasset solutions, international, at Goldman Sachs Asset Management. "There's an expectation that there's going to be more robust growth driven by pent up demand in the second half of the year."

Shares of GameStop rose 11% as individual traders, propelled by social media, piled into the stock. Shares swung wildly Monday and have gained more than 300% this year, in the latest sign that frenetic trading by retail traders is leading to outsize market swings.

Software and services firm BlackBerry, another favorite among individual traders, gained 0.3%. Etsy turned negative after rising 4.5% despite Tesla Chief Executive Elon Musk tweeting "I kinda love Etsy."

In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked up to 1.042% from 1.038% Monday. Yields rise when prices fall.

The Conference Board released its index Tuesday of consumer confidence, which showed U.S. consumers' outlook on the economy improved in January. Consumer confidence increased to 89.3 in January from 87.1 in December.

U.S. home-price growth continued to accelerate toward the end of 2020, data out Tuesday showed. In the year to November, the S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas, rose 9.5%.

The pan-continental Stoxx Europe 600 rose 0.8%. Shares of UBS Group rose 3.1% after the Swiss bank announced a new buyback program of up to $4.5 billion, having closed 2020 with a consensus-beating quarterly performance.

Travel and transportation stocks were hit hard on concerns about the speed of vaccine rollouts and the timing of some countries' reopenings. Jet-engine maker Rolls-Royce was down 3.4% at its lowest level of the year.

Indexes in Asia handed back some of the robust gains registered in the first few weeks of this year. The Hang Seng Index in Hong Kong dropped 2.6%, as heavyweight Tencent Holdings fell 6.3%, retreating from a record high reached in the previous session. The Shanghai Composite shed 1.5%, the Nikkei 225 retreated 1% and South Korea's Kospi Composite lost 2.1%.

In a surprise move, the People's Bank of China withdrew 78 billion yuan, or the equivalent of $12 billion, from the Chinese financial system through open-market operations Tuesday. The move runs counter to expectations in the run-up to the Lunar New Year holidays, when China's banking system usually needs more, not less, liquidity.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

January 26, 2021 12:08 ET (17:08 GMT)

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