The Nasdaq hit a record high on Tuesday, as growth-focused sectors gained, while Beijing's regulatory crackdown hammered shares of several US-listed Chinese firms.
The benchmark S&P 500, however, eased into negative territory shortly after opening at an all-time high on gains in mega-cap technology companies such as Microsoft Corp, Apple Inc, Amazon.com Inc and Alphabet Inc .
Nine of the 11 major S&P 500 sectors were trading lower, while technology, communication services and consumer discretionary were up.
Investors, meanwhile, waited for clues from the US Federal Reserve's policy minutes on when quantitative easing might be tapered. It will be released on Wednesday.
Wall Street is sensitive to any hints of a hawkish shift in the Fed's tone, as market participants have moved between "value" and "growth" stocks on fears that a potentially stronger-than-expected economic recovery could force the central bank to cut back its support.
The S&P 500 growth index also hit a record high on Tuesday, while the S&P 500 value index fell 1.1%. Growth stocks clocked their sixth straight weekly gain on Friday, outpacing their value counterparts.
"They've just been small new highs and it is basically a reflection that investors feel they have got nowhere else to go," said Sam Stovall, chief investment strategist at CFRA.
"The confidence is supported by the fact that investors are willing to rotate rather than just bailing out altogether."
Didi Global Inc shares slumped 22.8% after Chinese regulators ordered over the weekend the company's app be taken down days after its $4.4 billion listing on the New York Stock Exchange.
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Other US-listed Chinese e-commerce firms, including Alibaba Group, Baidu Inc and JD.com, fell between 2.4% to 4.5%, with the Chinese crackdown also weighing on the global markets.
At 10:07 a.m. ET, the Dow Jones Industrial Average was down 199.70 points, or 0.57%, at 34,586.65, the S&P 500 was down 11.23 points, or 0.26%, at 4,341.11 and the Nasdaq Composite was up 21.07 points, or 0.14%, at 14,660.40.
A survey showed US services industry activity grew at a moderate pace in June, likely restrained by labor and raw material shortages, with the Institute for Supply Management's non-manufacturing activity index falling to 60.1 last month from 64.0 in May, which was its highest reading ever.
The second-quarter earnings season is set to begin next week with big banks, while investors also watched for progress on President Joe Biden's infrastructure bill.
Among other stocks, American Express Co added 1.2% after Goldman Sachs raised its rating on the stock to "buy" from "neutral".
Friday’s early trade: S&P, Nasdaq hit record highs
US-listed shares of China's top two videogame streaming sites Huya and DouYu fell 2.3% and 6%, respectively, after China's antitrust regulator said it will block Tencent Holdings Ltd's plan to merge the firms.
Mobile gaming firm- Bilibili Inc fell 8.7%.
Declining issues outnumbered advancers for a 2.26-to-1 ratio on the NYSE for a 2.55-to-1 ratio on the Nasdaq.
The S&P index recorded 40 new 52-week highs and no new low, while the Nasdaq recorded 51 new highs and 46 new lows.