The Nasdaq and S&P 500 posted modest gains on Tuesday, a day ahead of major inflation data, weighed down by financial stocks as investors braced for major US banks to kick off earnings reporting season on Friday.

The tech-heavy Nasdaq Composite Index, boosted by chips, enjoyed a more substantial advance, with the S&P 500 nominally higher. The blue-chip Dow Jones Industrial Average closed essentially unchanged.

Wednesday's hotly anticipated Consumer Price Index (CPI) is at the top of most investors' minds as they tweak expectations on the timing and extent of the Federal Reserve's rate-cutting phase, following robust economic data such as last Friday's blockbuster employment report.

"The markets are nervous about tomorrow's CPI report and buying protection (amid) a growing perception that it could be an uncomfortably high inflation reading," said Michael Green, chief strategist at Simplify Asset Management in Philadelphia. "The market is moving to hedge itself."

JPMorgan Chase, Wells Fargo and Citigroup, due to report results on Friday, were the three constituents in the S&P Banking index to end lower.

"The financials kick off first-quarter reporting season and often set the tone," said Bill Northey, senior investment director at US Bank Wealth Management, Billings, Montana. "We are looking to the cyclical areas as an indicator of the health of corporate America."

While analysts expect inflation to continue meandering down toward the U.S. central bank's 2 percent goal, the National Federation of Independent Business reported on Tuesday that small business optimism touched an 11-year low in March, with inflation as the most pressing concern.

"The continued deterioration of the small business sentiment index is actually really important," Green added. "It's the same thing that we've seen in the past couple of cycles where the larger companies are well protected while small businesses are under extraordinary pressure."

The Dow Jones Industrial Average fell 0.02 percent, to 38,884. The S&P 500 gained 0.14 percent, at 5,210 and the Nasdaq Composite added 0.32 percent, at 16,307.

Cryptocurrency and blockchain-related stocks declined, tracking falling bitcoin prices.

Moderna was a bright spot, jumping 6.2 percent after the drugmaker's individualised cancer vaccine developed with Merck showed promise in an early-stage trial. (Reuters)