The Standard & Poor's 500 Index fell from a record and Caterpillar led a slide on the Dow Jones Industrial Average after the world's biggest maker of construction and mining equipment was among companies giving disappointing guidance.
Caterpillar sank 6 per cent after cutting its full-year sales and earnings outlook on reduced demand from mining companies. It reported third-quarter profit that missed expectations.
Broadcom, which makes chips for mobile phones, dropped about 3 per cent after announcing jobs cuts and forecasting fourth-quarter sales that lagged behind analyst estimates. Semiconductor company Altera sank almost 14 per cent, leading the tech-heavy Nasdaq Composite lower, after its fourth-quarter sales forecast missed estimates.
The S&P 500 fell 0.5 per cent to 1745.96 and the Dow was down 0.3 per cent to 15416.76. The Nasdaq fell 0.7 per cent to 3342.65.
"We've seen a mixed bag as far as earnings go, and comparisons will only get harder next quarter," Jerry Villella, investment specialist for JP Morgan Private Bank in Dallas, told Reuters. "We have more modest expectations going forward."
Of companies on the S&P 500 that have reported earnings, about 54 per cent have beaten revenue estimates, below the 61 per cent long-term average, Reuters said.
Former Federal Reserve Chairman Alan Greenspan told Bloomberg Television that the momentum is still for equity markets to move higher.
"In a sense, we are actually at relatively low stock prices," Greenspan said. "Indeed I say that so-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up."
JPMorgan Chase & Co led banks lower on the Dow, falling 1.2 per cent to US$52.9645. The company is near agreement on a settlement of almost US$6 billion with institutional investors including bond fund heavyweights Pacific Investment Management Co over the sale of mortgage-backed securities in the run-up to the financial crisis, Reuters reported, citing a source familiar with the talks.
The deal would be separate from the preliminary $13 billion settlement JPMorgan reached with the US government, the report said. Goldman Sachs Group fell about 1.1 per cent to US$157.56.
Boeing was a bright spot on the earnings calendar, lifting its full-year earnings estimate following a 12 per cent gain in third-quarter profit on demand for aircraft. The world's largest making of commercial planes said it would accelerate production of its 787 Dreamliner.
The shares rose 4.9 per cent to US$128.30, a record high and the biggest gain on the Dow.
The British pound fell to a seven-week low against the euro after the Bank of England kept its monetary stimulus unchanged.
Meantime, European Central Bank President Mario Draghi said the central banks will remain vigilant in its role as bank supervisor in Europe and won't hesitate to fail banks in its stress tests next year.
"Banks do need to fail" to prove the credibility of the exercise, Draghi told Bloomberg Television.
Relations between Germany and the US appeared to have chilled after Chancellor Angela Merkel called President Barack Obama to demand an explanation after being told American spy agencies had listened in on her own telephone calls. A White House spokesman said Obama had denied any such spying.