Just ahead of a pivotal Fed policy meeting and a clutch of Big Tech quarterly reports, US stocks fell, dragged by a drop of AI chip heavyweight Nvidia ( NVDA ).

The S&P 500 ( ^GSPC ) fell by 0.5% while the tech-heavy Nasdaq Composite ( ^IXIC ) dropped roughly 1.3%, as investors awaited key earnings from the likes of Microsoft ( MSFT ) and AMD ( AMD ). The Dow Jones Industrial Average ( ^DJI ) rose 0.5%.

Stocks are in the midst of a potentially momentous week featuring the Fed's interest-rate decision, the July jobs report, and results from four of the "Magnificent Seven" megacaps. All will be crucial for investors wondering whether the recent stock pullback is over, as they weigh expectations for rate cuts against concerns that Big Tech names have lost their AI-driven mojo.

Semiconductor stocks lagged on Tuesday, with shares of Nvidia dropping 7% at the closing bell.

Eyes are now on Microsoft's quarterly report due after trading ends, which will set the stage for results from Apple ( AAPL ), Amazon ( AMZN ), and Meta ( META ) in the following days.

Wall Street is watching closely for any sign that massive AI investments are starting to pay off. That question is in focus after July's volatile ride for stocks underlined the risks of the AI trade, as investors rotated out of Big Tech and into small caps.

Coffee-shop chain Starbucks ( SBUX ) will report after the market close, as will chip giant AMD .

Despite the AI jitters, a notable theme has emerged this earnings season — a willingness by investors to support companies that post weak results but outline a turn in their business coming soon.

32 charts that tell the story of markets and the economy right now

Meanwhile, the Fed began its July policy meeting on Tuesday. Policymakers are expected to bring no change in borrowing costs on Wednesday, but to lay the groundwork for a rate cut in September. After encouraging June inflation data, the market debate now centers on the timing and number of cuts this year.