US stocks were flat to higher on Tuesday as investors awaited Alphabet and Tesla earnings later in the day to gauge if the recent market rally has momentum to spare, while United Parcel Service and NXP Semiconductors plummeted after poor results.

United Parcel Service, seen as a bellwether for the global economy, slumped 12.4% after missing earnings estimates on subdued package delivery demand and higher labor-contract costs.

NXP Semiconductors fell 7.2% after forecasting third-quarter revenue below estimates, dragging the Philadelphia SE Semiconductor index down 0.8%.

The two stocks were the biggest losers on the S&P 500, while UPS pulled the Dow Jones Transport Average index lower 1.5%.

Amid a flurry of corporate earnings, focus now shifts to results from technology giants, which will be key in determining whether 2024's record rally can be sustained, as investors assess if US stocks are overvalued or have room to rise further.

"Second-quarter earnings remain at the center stage... Equity expectation misses are more dangerous now than in the first quarter, as shown by the harshness of the price action," said Bob Savage, head of markets strategy and insights at BNY Mellon.

Alphabet and Tesla, two of the so-called Magnificent Seven companies, are set to report quarterly results after markets close.

Alphabet shares rose 0.5%, while Tesla fell 0.5%. Other megacap stocks such as Microsoft and Amazon.com rose 0.6% and 2.5%, respectively.

The results will test whether a rotation away from megacap tech stocks in favor of underperforming sectors can continue. The small-cap Russell 2000 slipped 0.1%.

"Investors always reward growth, and if those smaller companies who've been overlooked for the first six months can show outperformance against their peers on a percentage basis, they're going to get the love," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

Among other earnings, Spotify Technology leapt 13.6% after its second-quarter results were broadly in line with estimates, while General Motors lost 5.4%.

Coca-Cola rose 1.0% after increasing its annual sales and profit forecasts, while Comcast lost 3.8% after it missed revenue estimates.

Of the 74 S&P 500 companies that have reported quarterly results during this earnings season, 81.1% beat expectations, according to LSEG data on Monday.

At 9:50am ET, the Dow Jones Industrial Average was down 7.58 points, or 0.02%, at 40,407.86, the S&P 500 was up 10.65 points, or 0.19%, at 5,575.06, and the Nasdaq Composite was up 51.70 points, or 0.29%, at 18,059.27.

Economic data due to release this week includes the Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, which will be crucial in assessing the monetary policy outlook against a backdrop of the recent inflation downtrend and signs of easing in the labour market.

Bets of a 25-basis-point interest-rate cut by September have shot up to nearly 92%, from nearly 60% last month, according to CME's FedWatch Tool, with two rate cuts expected by the year end.

Declining issues outnumbered advancers for a 1.46-to-1 ratio on the NYSE, and for a 1.23-to-1 ratio on the Nasdaq.

The S&P index recorded 17 new 52-week highs and one new low, while the Nasdaq recorded 46 new highs and 30 new lows.

  - Reuters