The Nasdaq ended lower for a second straight session on Tuesday, while the S&P 500 rose, as rising Treasury yields prompted investors to sell Tesla and other Big Tech names and buy stocks with lower valuations.

The S&P 500 growth index dipped 0.3 per cent and the value index climbed 0.8 per cent.

The Dow Jones Industrial Average rose 0.6 per cent to end at 35,813.8 points, while the S&P 500 gained 0.2 per cent to 4,690.7. The Australian sharemarket is set for a flat start, with futures at 7.59am AEDT pointing to a gain of 1 point at the open.

Treasury yields extended gains from Monday as investors ramped up expectations for interest rate hikes next year after Jerome Powell was nominated by President Joe Biden as Fed Chair for a second term.

Tesla fell over 4 per cent and Microsoft lost 0.6 per cent, with the two companies dragging on the Nasdaq more than any other stocks. Rising interest rates tend to make growth stocks less attractive to investors.

“The market is being whipsawed by a holiday shortened week, and it’s taking its cue from the recent uptick in interest rates, giving investors additional reasons to take profits in an overvalued market,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

With banks benefiting from higher interest rates, the S&P 500 banks index jumped 2 per cent, with Goldman Sachs, JPMorgan and Bank of America all rallying.

The S&P 500 energy index soared 3 per cent and was the best-performing sector. Oil prices rose to a one-week high after a move by the United States and other consumer nations to release tens of millions of barrels of oil from reserves to try to cool the market fell short of some expectations.