Stocks were muted on Tuesday as market participants looked for direction amid the ever-changing macroeconomic landscape in response to President Donald Trump's evolving tariff policies.

The Dow Jones Industrial Average (DIA  ) lost about 60 points on Tuesday after soaring almost 600 points in the previous session, wiping out its more than 500 point plunge on Friday following the Labor Department's monthly jobs report signaling broadening weakness for the labor market. The blue-chip index ended the session at 44,111.74.

The S&P 500 Index (SPY  ) fell about 0.5% to close at 6,299.19 and Nasdaq Composite (QQQ  ) dropped 0.7% to end at 20,916.55.

Trump on Tuesday said he plans to announce sector-specific tariffs on semiconductor and pharmaceutical imports "within the next week or so." The president told CNBC's "Squawk Box" that he will initally impose a "small tariff" on drugmakers, and then will raise the rate to 150% and then 250% over time -- the high end rate comes ahead of his previous threat to raise pharmaceutical tariffs to 200%.

"We want pharmaceuticals made in our country," Trump told CNBC.

On the economic front, two service sector reports gave different views of growth, with one notably raising concerns that the U.S. economy may be heading towards stagflation territory, represented by high levels of inflation alongside a weaker jobs market. Services represent about 70% of the U.S. economy.

The Institute for Supply Management's services index ticked slightly lower to 50.1 in July from June's reading of 50.8 -- still representing expansion by being over the neural level of 50 but coming in below estimates for further growth.

"July's PMI level continues to reflect slow growth, and survey respondents indicated that seasonal weather factors had negative impacts on business," Steve Miller, the chair of the ISM Business Survey committee, said in the release. "The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price."

However, the S&P Global's composite PMI, which combines services and manufacturing activity, rose to 55.1 in July from the previous month's 52.9. Chris Williamson, chief business economist at S&P Global, said the month's data represents "encouragingly robust economic growth at the start of the third quarter.

Wall Street also reacted to another round of earnings reports on Tuesday. Palantir Technologies (PLTR  ) stunned analysts late Monday by surpassing the $1 billion revenue mark two quarters ahead of expectations, with its revenue growing 48% during the quarter. The defense technology company raised its full-year revenue outlook on the growth, now calling for revenue to range between $4.142 billion and $4.150 billion from its previous $3.89 billion to $3.90 billion range.

"It has been a steep and upward climb -- an ascent that is a reflection of the remarkable confluence of the arrival of language models, the chips necessary to power them, and our software infrastructure," CEO Alex Karp wrote in a letter to shareholders.

Pfizer (PFE  ) also beat quarterly estimates on both top and bottom lines on Tuesday, as CEO Albert Bourla praised the drugmaker's post-COVID business development strategy.

"Pfizer had another strong quarter of focused execution and we're pleased with our progress in advancing our R&D pipeline, driving our commercial performance and expanding our margins," Bourla said in a statement. "We continue to strengthen our company for the future and we're confident in our ability to create further value for patients and our shareholders."

Industrial bellwether and Dow-member Caterpillar (CAT  ) reported an earnings miss on Tuesday and warned that Trump's tariffs could impact its revenues by $1.3 billion to $1.5 billion. However, CEO Joe Creed said in a statement that the manufacturer continues "to see strong orders across our segments as demand remains resilient, supported by infrastructure spending and growing energy needs."

Looking ahead, all eyes will be on earnings reports from companies including Advanced Micro Devices (AMD  ), Super Micro Computer (SMCI  ), Novo Nordisk (NVO  ), McDonald's (MCD  ), Disney (DIS  ), Uber (UBER  ) and Shopify (SHOP  ) on Wednesday.