U.S. stocks fell on Tuesday, retreating after initial earnings-fueled gains were overshadowed by cautious comments on the economic outlook from company executives and Federal Reserve Chairman Ben Bernanke.

Stocks opened higher in a reaction to better-than-expected results from Dow components such as Caterpillar Inc but the tone on earnings conference calls has been much more apprehensive, paralleling the Fed chief's cautious outlook.

Shares of Caterpillar, up 6.1 percent at $38.88, were still the Dow's strongest, but were far off the day's highs after the company said it expects the third quarter to be the year's weakest and extremely challenging.

Caterpillar's results showed the company beat bottom-line earnings estimates, but sales fell short of expectations.

United Technologies Corp shares fell 2.1 percent to $53.84 after the company, a Dow component, posted a 23 percent drop in profit and lowered its 2009 forecast. The company's chief financial officer said cost-cutting will lead profit growth. but we do not anticipate a significant economic recovery in 2010.

The story (UTX and Caterpillar) put out there is, 'We have done a great job cutting costs, we've done a great job managing our business and here's a bottom-line beat.' I don't think that's enough to get this market going, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

If we don't get some revenue beats, this party is going to end real quick, especially given how overbought we are.

Further adding to investor caution, Fed Chairman Ben Bernanke said in testimony to a U.S. House of Representatives committee that job insecurity plus declines in home values and tight credit are likely to limit gains in consumer spending -- a major driver of the U.S. economy.

The Dow Jones industrial average <.DJI> dipped 4.98 points, or 0.06 percent, to 8,843.17. The Standard & Poor's 500 Index <.SPX> dropped 4.98 points, or 0.52 percent, to 946.15. The Nasdaq Composite Index <.IXIC> fell 11.29 points, or 0.59 percent, to 1,898.00.

The S&P 500 closed at an eight-month high on Monday, as the early stages of a healthier-than-expected second-quarter earnings season increased investors' hopes about the economic recovery.

But Tuesday's warnings spoiled the mood.

Further weighing down the market,, shares of Regions Financial Corp and Comerica Inc , two large U.S. regional banking companies, slid after both posted second-quarter losses, as a deteriorating commercial property market caused bad loans to soar. Regions' stock dropped 13.4 percent to $3.50 and Comerica's stock lost 9.5 percent to $20.66.

The KBW Bank Index <.BKX> dropped 3.6 percent.

(Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)