New construction of U.S. homes rose less than expected in September and U.S. producer prices posted an unexpected decline, both pointing to an anemic economic recovery.
Shares of companies in the materials sector declined as commodity prices fell. The Reuters/Jefferies CRB commodity index <.CRB> was off for the first time in seven sessions. Crude oil futures slipped as well, and energy shares declined.
Shares of home builders also fell, with the Dow Jones home construction index <.DJUSHB> down 2 percent.
The market is trying to absorb all the earnings news and see where the economy stands. The market has rallied recently pretty good, so it's giving back some of the gains, said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois.
Off the weaker housing data, people are forecasting a little bit weaker economy and that is hurting commodities, as the economy may not be as strong as previously expected.
Caterpillar Inc shares hit a 12-month high after the machinery maker's third-quarter earnings soared past expectations.
Caterpillar, up 3.4 percent at $59.80, was the Dow's <.DJI> best performer, even as the industrial average dropped 70.43 points, or 0.70 percent, to 10,021.76. The Standard & Poor's 500 Index <.SPX> fell 7.88 points, or 0.72 percent, to 1,090.03. The Nasdaq Composite Index <.IXIC> lost 14.29 points, or 0.66 percent, to 2,162.03.
Among other blue-chips reporting Tuesday, United Technologies Corp was off 0.7 percent at $65.00 after its profit fell from the year-ago quarter. Pfizer Inc fell 1.3 percent to $17.74 despite beating profit expectations.
Coca-Cola Co fell 1.2 percent to $54.13 after reporting sales that missed expectations.
Also weighing on stocks was crude oil, which fell after eight straight trading days of gains as the NYMEX November crude contract approached expiration. U.S. crude oil futures slid 0.6 percent, or 52 cents, to settle at $79.09 a barrel.
Shares of Dow components Chevron Corp and Exxon Mobil Corp fell about 1 percent, with Chevron at $76.90 and Exxon at $72.96.
Apple Inc posted earnings and sales that were higher than expected in quarterly results released after Monday's closing bell. On Tuesday, brokerages lifted their price targets on the iPhone maker's stock to as much as $280, implying a gain of about 40 percent from current levels. Apple shares gained 4.8 percent to $198.94.
In spite of Tuesday's decline, the stock market's trend in the third quarter has been mostly positive. U.S. stocks have risen steadily as S&P 500 companies have largely exceeded earnings expectations. The S&P 500 was up 5.5 percent in the last 10 trading days.
(Editing by Jan Paschal)