US stocks remained near record levels on Tuesday as investors weighed concerns of a potential pullback while Federal Reserve Chair Jerome Powell began his semiannual update to Congress. The S&P 500 edged up about 0.3%, adding to its 35th record close of the year on Monday. The tech-heavy Nasdaq Composite also rose roughly 0.2% following its own record close the day before. The Dow Jones Industrial Average, after earlier losses, climbed back into positive territory by mid-afternoon, rising around 0.4%.

The recent surge in stock prices can be attributed to signs of a US economic slowdown, which have increased expectations of interest-rate cuts by the Federal Reserve. In his testimony to Congress, Powell expressed optimism about the economy, highlighting evidence of cooler inflation. However, he emphasized the need for more "good data" to be confident in whether inflation is moving towards the central bank's 2% target.

Analysts are placing bets on the Fed cutting interest rates twice this year, with Oxford Economics Chief US Economist Ryan Sweet expressing increasing confidence in a rate cut in September. Powell's appearances before Congress this week, along with key updates on consumer inflation on Thursday, are expected to influence stock market trends.

Despite the overall positive sentiment, some caution is creeping into the market as the possibility of a summer pullback gains support. Morgan Stanley strategist Mike Wilson has warned of a potential 10% correction.

In other news, Baidu, the Chinese tech conglomerate, saw an 8% increase in its shares on Tuesday after Beijing announced support for the introduction of robotaxis in ride-hailing and car rental fleets. Baidu's Apollo platform, its open-source platform for autonomous driving, has expanded its robotaxi operations significantly over the past year.

Meanwhile, Tesla's stock continues to rally, marking its tenth consecutive day of gains with a 4% increase in mid-afternoon trading. The strong performance has enabled Tesla to erase all its year-to-date losses, with the stock up approximately 5% since the beginning of the year. The surge is attributed to better-than-expected second-quarter vehicle production and deliveries, as well as momentum surrounding Tesla's artificial intelligence businesses.

The Federal Reserve Chair's testimony also impacted treasury yields, which rose as Powell addressed Congress. The benchmark 10-year treasury yield inched up about 6 basis points to trade near 4.33%, while the 30-year yield also increased by around 6 basis points to trade around 4.51%.

Powell's remarks about the economic landscape and the need for more good data to support rate cuts signaled the Fed's shifting stance towards potential rate reductions. Market observers are closely monitoring the next inflation reading set to be released on Thursday, which is not expected to show worsening inflation but is unlikely to see a significant drop either.

As the market awaits Powell's upcoming appearance before the House Financial Services Committee, investors remain watchful of the potential impact of rate cuts and broader economic factors on stock prices.