Investors are now waiting for consumer price index data to come in on Wednesday.

US stocks closed mixed on Tuesday as investors geared up for a pivotal inflation report.

Each index initially opened in the green after investors were surprised by a cooler-than-expected producer price index report. Wholesale inflation increased 0.2% month-to-month in December, below the estimated 0.4% gain.

"Producer prices deliver a pleasant post-holiday surprise. Strong holiday demand did not trigger an acceleration in producer costs. This is good news for the overall inflation picture and potentially pushes back on the rate hike narrative," said Scott Helfstein, head of investment strategy at Global X.

Ahead of the report, traders have grown fearful that stubborn inflation would cement the Federal Reserve's hawkishness, eroding hope for further interest rate cuts this year.

While the PPI data eased concerns, Wednesday's consumer price report will play a more critical role in determining inflation trends.

Starting Wednesday, the market will also be monitoring the start of fourth-quarter earnings. JPMorgan, Citigroup, Goldman Sachs, and Wells Fargo will kick off the season, followed by more banks on Thursday.