The VIX, which measure volatility, rose to its highest level in more than three months.
The Dow Jones industrial average (^DJI) gave up its modest gains in the final few minutes, losing another 41 points, and extending its losing streak to five days, and more than 600 points. The Standard & Poor's 500 index (^GPSC) fell 8, and the Nasdaq composite (^IXIC) lost 44 points.
Among the blue chips, Caterpillar (CAT) rose 6 percent after posting better than expected results and forecasting that sales this year will stabilize after declining in 2013. It also revealed plans to buy back up to $10 billion of company stock.
Merck (MRK) gained 1 percent, moving to a 52-week high. JPMorgan raised its rating by two notches.
United Technologies (UTX) gained 2 percent. A defense industry newsletter said the company is considering the sale or spinoff its Sikorsky helicopter unit.
But some financials remain weak. Visa (V) and Goldman Sachs (GS) both lost 2 percent.
Homebuilders were weak following a Barclay's downgrade. KBHome (KBH) lost 3 percent.
Elsewhere, Charter Communications (CHTR) jumped 4 percent on word that Comcast (CMCSA) is unlikely to make a solo bid for Time Warner Cable (TWC). That reduces the chances that Charter will need to fight a bidding war in its own quest to acquire its larger rival. Comcast gained nearly 1 percent, Time Warner was little changed, and Cablevision gained 4 percent.
Xerox (XRX) lost 5.5 percent on a pair of brokerage downgrades.
And the biotech firm Geron (GERN) slid 15 percent as 20 patients withdrew from a key clinical drug study.
What to Watch Tuesday:
- The Commerce Department releases durable goods for December at 8:30 a.m. Eastern time.
- Standard & Poor's releases the S&P/Case-Shiller index of home prices for November at 9 a.m.
- The Conference Board releases the Consumer Confidence Index for January at 10 a.m.
- Federal Reserve policymakers begin a two-day meeting to set interest rates.
- American Airlines Group (AAL)
- Amgen (AMGN)
- AT&T (T)
- Comcast (CMCSA)
- D.R. Horton (DHI)
- DuPont (DD)
- Ford Motor (F)
- Pfizer (PFE)
- T. Rowe Price (TROW)
- Yahoo (YHOO)