Bank shares boosted the Dow Jones and the S&P 500 indexes on Tuesday as the big four lenders raised dividends following a stress test, but a sharp drop in consumer confidence brought to fore the risks from rising inflation.
Wall Street's main indexes started the week on soft footing on worries of rising prices and an aggressive Federal Reserve dominated sentiment.
Economic data remains at the forefront of investors' focus amid few market moving catalysts till the start of earnings season in two weeks.
The Conference Board said its consumer confidence index dropped 4.5 points to a reading of 98.7 this month, as worries about high inflation left consumers anticipating that economic growth would weaken significantly in the second half of the year.
Investors are now looking at data to determine whether the economy can withstand large interest rate hikes by the U.S. central bank to stamp out inflation.
"People are coming into the end of the quarter with a little bit more stability than they had certainly a month ago and have digested that the Fed may need to use recession as a policy tool," said David Waddell, chief executive officer at investment advisory firm Waddell & Associates.
Morgan Stanley rose 3.1% and led gains among big banks including Goldman Sachs, Bank of America and Wells Fargo. The S&P 500 banks index rose 1.7%.
Airlines, cruises, casinos and hotels rose after China's slashing of the quarantine time for inbound travelers by half boosted hopes of a big jump in international travel and spending.
A 2.6% gain in Spirit Airlines led gains among air carriers, while Melco Resorts jumped 10.3% to lead the rise in the casino sector.
Shares of Walt Disney Inc gained 3.4% the company's Shanghai Disney Resort said it would reopen the Disneyland theme park on June 30 after being shut for more than three months.
The S&P 500 and the Nasdaq are set to post losses in June and are on course to log two straight quarterly declines for the first time since 2015.
At 10:21 a.m. ET, the Dow Jones Industrial Average was up 150.44 points, or 0.48%, at 31,588.70, the S&P 500 was up 10.53 points, or 0.27%, at 3,910.64, and the Nasdaq Composite was down 26.88 points, or 0.23%, at 11,497.67.
Nike Inc shed 3.9% as it forecast first-quarter revenue below estimates on expectations of more discounts and pandemic-related disruptions in China, its most profitable market.
Occidental Petroleum Corp climbed 5.2% after Warren Buffett's Berkshire Hathaway Inc raised its stake in the shale producer.
The S&P 500 energy sector index rose 3.7% for the third straight day.
Advancing issues outnumbered decliners by a 2.68-to-1 ratio on the NYSE and decliners by a 1.47-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 20 new highs and 31 new lows.
(Reporting by Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Editing by Anil D'Silva and Maju Samuel)