US stocks had ended higher on Monday, rebounding from losses late last week with help from Apple and financial shares, but a drop in biotech shares limited the advance.
Shares of biotech companies fell after US Democratic presidential candidate Hillary Clinton said she would announce a plan to stop "price gouging" for speciality drugs.
The S&P healthcare sector fell 1.4 per cent and was the only S&P 500 sector index to end lower. The Nasdaq biotech index slumped 4.4 per cent.
Financial shares bounced back after losing ground following Thursday's Federal Reserve decision to keep rates unchanged. The S&P financial index was up 1.1 per cent.
But trading was volatile, continuing the recent trend, with both the S&P 500 and Nasdaq in negative territory earlier.
"We had a rebound from Friday's selling... though there still is among investors a high level of uncertainty as to what the Fed statement meant," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
"That kind of hinders investors from grabbing the ball and running with it."
The Dow Jones industrial average rose 125.61 points or 0.77 per cent to 16,510.19, the S&P 500 gained 8.94 points or 0.46 per cent to 1,966.97 and the Nasdaq Composite added 1.73 points or 0.04 per cent to 4,828.96.
Growth concerns
Fears of slowing growth in China sparked a sharp selloff in global stock markets in recent weeks and the Fed's comments about the global economy exacerbated those concerns.
Investors are now focusing on the next Fed meeting on October 27-28, though some economists now wonder whether the Fed will raise rates at all this year.
Apple was up 1.6 per cent at $115.21, leading the S&P 500 higher. The Wall Street Journal reported Apple has designated building an electric car as a "committed project" and has set a target shipping date for 2019.
Chipmaker Atmel jumped 12.7 per cent to $8.19 a day after Dialog Semiconductor agreed to buy the company for about $4.6 billion.
Shares of GoPro were down 8.2 per cent at $32.27 after Barron's said the video camera maker's shares could plunge to $25 as its latest product launch underwhelmed customers amid increasing competition.
Advancing issues outnumbered declining ones on the NYSE by 1,827 to 1,216, for a 1.50-to-1 ratio; on the Nasdaq, 1,492 issues fell and 1,308 advanced for a 1.14-to-1 ratio favouring decliners.
The S&P 500 posted three new 52-week highs and 18 lows; the Nasdaq recorded 36 new highs and 68 lows.
About 6.5 billion shares changed hands on US exchanges, below the 8.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.