The S&P 500 moved higher, while the Nasdaq fell following a tumultuous session on Tuesday, as investors watched inflation data and waited for quarterly profit reports to explain market prices and the strength of the US economy.

Stocks fluctuated between gains and losses throughout the day. Equities surged initially after a Labor Department report indicated the producer price index rose less than expected in December, while the report did not have a significant impact on expectations about the Federal Reserve's likely monetary policy course for this year.

Investors were anticipating Wednesday's consumer price index reading, which would affect forecasts for inflation and the Fed.

"There is an inherent level of uncertainty out there about where rates and the Fed will go," said Chris Fasciano, chief market strategist at Commonwealth Financial Network.

"We'll see what happens tomorrow morning," he remarked, referring to the CPI data.

The Dow Jones Industrial Average (.DJI) increased 221.16 points, or 0.52%, to 42,518.28, the S&P 500 (.SPX) gained 6.69 points, or 0.11%, to 5,842.91, and the Nasdaq Composite (.IXIC) fell 43.71 points, or 0.23%, to 19,044.39.

According to LSEG data, the market is pricing in approximately 29 basis points in Fed rate reduction by the end of 2025, with expectations for at least a 25 basis point drop not going beyond 50% until the meeting in June.

Adding to investor caution, US Treasury rates remained rising, with the benchmark 10-year Treasury note yielding 4.784%, close to a 14-month high touched on Monday.

Quarterly earnings begin on Wednesday with reports from major banks, which are likely to report higher profits due to strong dealmaking and trading activity.