I second this, as an American. “What’s up”, “hey”, or “yo” (or some combination of the above like “yo, what’s up?”) are all extremely ubiquitous and way more common than more standard greetings like “hi” or “hello”, I
in my experience.
For a phatic ( https://en.m.wikipedia.org/wiki/Phatic_expression ) greeting like this, you're pretty much safe to respond with any other phatic greeting. These phrases just serve as verbal handshakes of acknowledgement, and don't need to be interpreted literally.
"What's up" is actually a true invitation to tell the person recent events that have happened to you. If you don't want to give many details, possible responses are "Not much", "Same old, same old", "Nothing new", etc. You can also respond in the same way as you would to "How are you?", e.g. "Let's see, I'm doing good, trying to stay sane in Corona-times, but healthy!"
You should never just repeat "What's up" back without first answering the question. That is, it's OK to say "Not much, what's up with you?" but not just point black "What's up" in response.
I'd be cautious calling it a "true invitation"; it is true that someone who greets with "what's up" isn't going to be put off by a brief legitimate answer, but the greeter is likely not trying to introduce a conversation topic on your well-being, and may be caught off-guard if you launch into an extensive answer.
I would also caution against strongly saying that one should "never" fail to answer the question; in the US at least, it's such a common/generic expression that nobody is likely to be offended if you respond with "hey, how's it going?", or "hey, what's up?", or "what's up with you?".
The situation is similar to "howdy", which almost nobody outside the US south realizes is actually a question (short for "how are you doing?"). Sincerely answering "howdy" with e.g. "I'm fine, thanks" is a bit of a shibboleth that southerners can use to identify each other, but failure to do so is not any real faux pas.
I'm actually not 100% sure now that I think about it, but I think what I do is figure out from the intonation/context whether it's intended as a generic greeting (in which case I'd repeat it back) or as an actual question (in which case I might respond with "oh, not much, what about you?" or similar).
