The benchmark S&P index was holding above its 50-day moving average around 1,840, a support level which could trigger more declines if convincingly broken. The index has managed to stay above the 1,840 level several times over the past month.

On Monday, the S&P 500 suffered its biggest three-day drop in two months and the Nasdaq posted its worst three-day decline since November 2011 as investors bid down Internet stocks and rotated into defensive names.

Biotech stocks, among the momentum names that have slumped in recent weeks, fell again on Tuesday, with Gilead Sciences Inc

(GILD.O), down 2.4 percent to $70.49 and Biogen Idec Inc (BIIB.O), down 1.8 percent to $288.81 among the biggest drags on the S&P 500. The Nasdaq biotech index .NBI lost 1.2 percent.

"What happened over the past couple of the days is we had this rotation out of the darling stocks into more conservative issues, which is a good sign. It's a healthy move seeing this rotation into more defensive and conservative issues," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"Up until now we saw the rotation process take us down and as earnings come out we could enter into more of a corrective stage, but nothing too serious."

Earnings season gets under way this week, with results due from companies including Alcoa Inc (AA.N) after the close, retailer Bed, Bath & Beyond (BBBY.O) on Wednesday, while financials JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) close out the week with results on Friday.

S&P 500 companies' first-quarter earnings are projected to have increased just 1 percent from a year ago, Thomson Reuters data showed. The forecast is down sharply from the start of the year, when profit growth was estimated at 6.5 percent.

A lackluster first-quarter earnings season hurt by a harsh winter could spark a pullback, some analysts said, with investors expressing optimism for the second quarter as weather improves.

The Dow Jones industrial average .DJI fell 13.39 points or 0.08 percent, to 16,232.48, the S&P 500 .SPX gained 0.82 points or 0.04 percent, to 1,845.86 and the Nasdaq Composite .IXIC added 13.108 points or 0.32 percent, to 4,092.861.

The recent slump has pushed the Dow .DJI, Nasdaq .IXIC and S&P 500 .SPX into negative territory for the year.

A U.S. jury ordered Takeda Pharmaceutical Co Ltd (4502.T) to pay $6 billion in punitive damages and Eli Lilly and Co (LLY.N) to pay $3 billion in a case claiming that cancer risks associated with the Actos diabetes drug were concealed. Eli Lily shares inched up 0.3 percent to $58.77.

Gigamon Inc (GIMO.N) slumped 31.5 percent to $17.95. The maker of network traffic management software, estimated lower-than-expected first-quarter revenue.

Alkermes Plc (ALKS.O) was a bright spot among biotechs, up 4.5 percent to $42.93 after the company said its experimental drug to treat the symptoms of schizophrenia met the main goal in a late-stage study.