By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks closed mostly higher on Tuesday, though disappointing earnings results from Verizon Communications Inc and the Travelers Cos. Inc. weighed on the Dow.

Main indexes rose earlier in the session after the news that China's central bank injected liquidity into the financial system, benefitting materials and energy sectors.

The S&P 500(SPX) closed 5.10 points, or 0.3%, to 1,843.80, breaking a two-day losing streak. The Dow Jones Industrial Average (DJI) ended 44.12 points, or 0.3%, lower at 16,414.44, dragged down by losses in Verizon and Travelers.

The Nasdaq Composite(RIXF) was the best performing index, gaining 28.18 points, or 0.7%, to 4,225.76. The gains in the index were driven by a rally in Apple, Inc., its heaviest-weighted component

U.S. markets were closed on Monday in observance of Martin Luther King Jr. Day, and on Tuesday, a winter storm sent some traders home early in parts of the Northeast and mid-Atlantic.

Investors focused on earnings releases in a week light on economic news ahead of the Federal Reserve meeting scheduled for next week.

"Trading has been volatile on thin volumes," said Channing Smith, managing director at Capital Advisors.

"In absence of economic data, focus is on earnings and they have been mixed. Markets need a catalyst to break through the previous highs, and earnings so far have not been as good as expected," Smith said.

"The longer the markets trade without breaking though the highs, the higher the chances of a sell-off in the near future," he added.

Dragging on the Dow, Verizon Communication Inc. (VZ) shares fell 1.3%. The firm said it swung to a profit amid a growth in subscribers, particularly in its wireless and FiOS divisions. However, investors were concerned with tougher competition.

Shares in Johnson & Johnson(JNJ) slid 1.1%, also hitting the Dow, after the company reported fourth-quarter results. While the quarterly earnings per share were above analyst expectations, the full-year outlook disappointed investors.

Shares in the Travelers Companies Inc. (TRV) fell 1.7% in spite of beating earnings estimates.

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Delta Air Lines Inc. (DAL) shares climbed 3.3% on Tuesday after the firm's fourth-quarter earnings beat Wall Street expectations and Delta offered an upbeat outlook for the current quarter.

Forest Laboratories Inc. (FRX) gave up earlier gains and closed 1.1% lower even though the pharmaceuticals firm reported that it swung to a profit in the third-quarter and upgraded its outlook for the current quarter.

A Bank of America Merrill Lynch survey of global fund managers found that more investors think that U.S. stocks are overvalued. The percentage of investors who think U.S. equities are too expensive is at the highest level since 2000. A Bloomberg poll released on Tuesday found that investors are the most bullish about the global economy in five years, highlighting the brightening outlook for the recovery.

The S&P 500's cyclical sectors -- energy and natural resources -- were among the biggest gainers after the People's Bank of China said it provided emergency funding support for commercial banks as they gear up to meet demands for cash ahead of the Lunar New Year. The news lifted Hong Kong stocks as well as European stocks.

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