after yesterday's record run inspired copy-cat gains overseas, supported by M&A activity and lingering hopes that the financial system is putting past indiscretions behind it," said analysts at Action Economics.
The Dow Jones Industrial Average advanced 2.1 points to 14,089.7, while the S&P 500 fell 0.3 points to 1,546.74 and the Nasdaq Composite rose 0.76 points to 2,741.75.
Wall Street rallied Monday, pushing the Dow to a record close as write-downs by Citigroup Inc. bolstered thinking that investors now have a handle on the extent of the damage stemming from risky home loans.
On Tuesday, Citigroup disclosed its plan to buy the 32% of brokerage Nikko Cordial Corp. that it does not already own for about $4.6 billion in stock.
At 10 a.m. Eastern, the National Association of Realtors is slated to report its pending-home sales index for August in data that could offer further insight into the embattled housing sector.
In a deal that highlights the strength of Canada's currency against the U.S. dollar, Canadian banking giant TD Bank Financial Group said it would acquire Commerce Bancorp Inc. , of Cherry Hill, N.J., for $8.5 billion in stock and cash.
Other activity on the merger front had the Nasdaq Stock Market Inc. agreeing to acquire the Boston Stock Exchange for about $61 million.
Shares of Pepsi Bottling Group Inc. are likely to get a boost after the company reported a better-than-25% rise in third-quarter profit and revised higher its full-year outlook.
Palm Inc. shares slumped in premarket trades after the wireless device maker reported losses for its first fiscal quarter and issued a disappointing forecast for the current period. .
Also on tap are U.S. auto sales results for September, with Ford Motor Co. and Chrysler both expected to post double-digit declines.
In early action on the New York Mercantile Exchange, gold futures tumbled as traders rushed to lock in gains, with gold for December delivery falling $16.60 to $737.50 an ounce. .
Overseas, markets in Asia climbed to record levels, while the Shanghai exchange was closed for a holiday.
Gains from Tesco, Britain's largest supermarket chain, lifted London's top index, as investors cheered solid sales and profit growth. .
By Kate Gibson