U.S. stocks ended slightly lower on Tuesday, reversing course late in the session as strength in the dollar offset optimism about deal news.
The S&P utilities sector, which helped lead gains on Monday, was the biggest drag on the S&P 500, closing down 1.1 percent.
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The dollar recovered from recent losses, reaching session highs in afternoon trading. That shifted investor focus again to worries about its impact on U.S. earnings.
"If the (dollar) move is gradual it shouldn't impact stocks too much, as companies will have a chance to hedge against the impact, but a sharp rise will have an impact," said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.
Stocks were in positive territory for most of the session, lifted by deal news that suggested companies still see value in the market.
Shares of FedEx rose 2.7 percent to $171.16 as it seeks to buy Dutch package delivery company TNT Express for $4.8 billion.
Two years ago, competition regulators blocked United Parcel Service's bid for TNT because, unlike FedEx, that suitor already had a strong European network.
The Dow Jones industrial average fell 5.43 points, or 0.03 percent, to 17,875.42, the S&P 500 lost 4.29 points, or 0.21 percent, to 2,076.33 and the Nasdaq Composite dropped 7.08 points, or 0.14 percent, to 4,910.23.
While a strong U.S. dollar is a sign of solid fundamentals, analysts are concerned that the currency will weigh on the earnings of U.S. multinational companies. Bank of America Merrill Lynch on Tuesday cut its 2015 earnings estimates for the S&P 500 by $2 a share, citing the foreign exchange headwind.
General Motors shares fell 2.5 percent to $35.73 and the stock was among the day's most active after Canada agreed to sell nearly 73.4 million shares of the automaker to Goldman Sachs.
Other decliners included shares of Viacom, which fell 1.9 percent to $67.28 after it halted its $20 billion repurchase program as it embarks on a restructuring that includes cutting jobs and reorganizing three of its domestic network groups.
Shares of Twitter jumped 4 percent to $52.87 and hit their highest in six months following a Barron's report that the company has hired advisers to fend off a takeover bid.
Informatica Corp jumped 4.3 percent to $47.79 after the enterprise software provider said it would be taken private by Permira Advisers and Canada Pension Plan Investment Board.
Declining issues outnumbered advancing ones on the NYSE by 1,699 to 1,352, for a 1.26-to-1 ratio on the downside; on the Nasdaq, 1,457 issues fell and 1,267 advanced for a 1.15-to-1 ratio favoring decliners.
The benchmark S&P 500 index was posting 9 new 52-week highs and no new lows; the Nasdaq Composite was recording 68 new highs and 24 new lows.
About 5.7 billion shares changed hands on U.S. exchanges, compared with the 6.3 billion daily average for the month to date, according to data from BATS Global Markets.
(By Caroline Valetkevitch; Additional reporting by Ryan Vlastelica; Editing by Meredith Mazzilli)