Stocks struggle to halt slide

NEW YORK (CNNMoney)

The Dow Jones industrial average and the S&P 500 were flat in early trading, but the Nasdaq held a small gain.

Investors have been worried about stock valuations ahead of what is expected to be lackluster quarter for corporate earnings. The technology sector has been hit particularly hard, but investors were dipping a toe back into the sector after three days of heavy selling.

Shares of Facebook (FB, Fortune 500), Netflix (NFLX) and Tesla (TSLA) were all higher in early trading. Biotechnology and healthcare companies were also finding some support. The iShares Nasdaq Biotechnology ETF (IBB) extended an advance that started late Monday.

Related: Fear & Greed Index still gripped by fear

U.S. stocks closed in the red Monday for a third consecutive trading day. The Nasdaq closed down more than 1% after sliding a combined 3.6% on Thursday and Friday. The Dow and S&P 500 also fell more than 1%. All three major U.S. stock indexes are now negative for the year.

As investors fled more risky corners of the market, shares of companies that are considered defensive investments rallied. Makers of consumer staples, such as Kraft (KRFT, Fortune 500), Procter & Gamble (PG, Fortune 500) and Colgate Palmolive (CL, Fortune 500), have been popular safe harbors in recent days.

Traders said the recent selling was triggered in part by concerns that stock prices had risen too high given the outlook for earnings this year. But prices may have fallen back down to levels that are more consistent with companies' long-term growth potential, notes David Lutz, head ETF trader at Stifel.

"This rotation may be entering the final innings," he said.

In corporate news today, Alcoa (AA, Fortune 500) will report first-quarter results after the closing bell, the first major company to do so.

Related: CNNMoney's Tech30

European markets were falling, erasing earlier narrow gains, as tensions flared again in Ukraine. Russia's Foreign Ministry warned Kiev on Tuesday that use of force in the eastern region could lead to civil war.

Asian markets were mixed Tuesday. Tokyo's Nikkei fell 1.4% as the central bank ended a policy meeting without any hint of further economic stimulus.

China's benchmark Shanghai Composite index rose 1.9%. Chinese markets, which were closed Monday for a holiday, have been supported by hopes the government will take steps to boost faltering growth.

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