Stocks took a turn higher again by mid-afternoon Tuesday in unpredictable and undecided trading.
The S&P 500 was up 0.4%, the Dow Jones Industrial Average gained 0.13%, and the Nasdaq climbed 0.2%. The Volatility Index (VIX.X) fell 4.1% to 19.84.
Markets have spent much of the day flitting between slight losses and gains after a massive selloff a day earlier. U.S. stocks tanked on Monday, the first day of trading in 2016, as fears over China's economy and Middle East tensions coalesced to spook Wall Street. The Dow suffered its worst start to the year since 2008.
"The first week of trading in the New Year generally sets the tone of the direction of the market for the remainder of the year, and while we do expect a market correction, our greatest concerns remain geopolitical," Peter Cardillo, chief market economist at First Standard Financial, wrote in a note. "Anything that disrupts investors' confidence raises the risk of a very volatile market environment."
Gun stocks were higher as President Barack Obama outlined executive action on gun control. Obama said the measures include increased mental health treatment and more-intensive background checks.
Smith & Wesson (SWHC) was already 10% higher after raising its sales forecast for its current quarter. The gunmaker expects quarterly sales between $175 million and $180 million thanks to a solid performance during gun-show season. Rival Sturm, Ruger & Co. (RGR - Get Report) climbed 7%.
China's Shanghai Composite Index closed 0.3% lower on Tuesday in more restrained trading after the People's Bank of China injected 130 billion yuan ($19.95 billion) into the banking system to boost investor confidence. The investment marked the largest made by China's central bank since September. The Shanghai Composite plummeted 7% on Monday after weak manufacturing numbers prompted more fears over the world's second-largest economy.
Citi analyst Robert Buckland downgraded U.S. equities to "underweight," arguing that there are better opportunities elsewhere.
"Fading EPS momentum and rising [Federal Reserve] funds mean that, after six consecutive years of outperformance, we cut the U.S. to underweight," Buckland wrote in a note.
Ford (F - Get Report) said sales in December rose 8% from a year earlier while sales for 2015 jumped 5%. The stock declined 2.6% on Tuesday. Toyota (TM - Get Report) car sales jumped 10.8% to 238,350 in December, slightly below estimates of 13% growth. The automaker saw solid gains in both truck and car sales.
Fiat Chrysler (FCAU - Get Report) enjoyed its best December in 90 years after reporting a 13% jump in sales. Jeep sales soared 42%, the best month ever. Sales climbed 7% over the year as a whole. Fiat Chrysler shares fell slightly.
Volkswagen (VLKAY) continued to see a drop in U.S. sales following its scandal last year. Sales fell 9.1% in December to 30,956 vehicles. Shares have fallen more than 20% since mid-September when news broke that Volkswagen had installed emissions test-gaming software in its vehicles.
General Motors (GM - Get Report) reported a 5.7% increase in December sales, beating analysts' estimates of a 5% increase. However, shares fell as the automaker failed to match the pace of rivals, such as Ford.
Eli Lilly (LLY - Get Report) was slightly lower after issuing weaker-than-expected guidance for the full year. The drugmaker expects earnings of $3.45 to $3.55 a share, below estimates of $3.65 a share. The company currently has nine drugs in its pipeline, some of which it is expected to launch this year.