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New York - The Dow fell more than 260 points in early trade on Tuesday following several disappointing earnings reports from big companies and a surprising drop in durable goods orders.
About 30 minutes into trade, the Dow Jones Industrial Average stood at 17 414.63 down 264.07 points (1.49%).
The broad-based S&P 500 dropped 24.53 (1.19%) to 2 032.56, while the tech-rich Nasdaq Composite Index fell 77.34 (1.62%) to 4 694.43.
Investors pummelled Dow member Caterpillar (-7.2%) after the heavy equipment maker said fourth-quarter earnings fell by nearly a quarter due in part to a hit from lower oil prices. Microsoft was another big loser, falling 9.6% as profits declined 10% to $5.9bn.
New orders for long-lasting industrial goods fell 3.4% in December, signalling some persistent weakness in the manufacturing sector, according to Commerce Department data.
Markets in Britain, France and Germany all dropped sharply as Greece's new government was on a collision course with creditors over plans to renegotiate its enormous bailout.
READ: Greek fears send European stocks sliding again
Investors were also gearing up for a two-day Federal Reserve meeting that concludes on Wednesday. Investors will be looking for the Fed's commentary on how weak earnings and eurozone uncertainty affect the time-frame for raising interest rates.
Dow member Procter & Gamble shed 2.9% as second-quarter net income dropped 31% to $2.4bn in part due to the strong dollar.
Pfizer, another Dow component, gained 1.4% as net income sank 52.1% to $1.2bn. The results, however, bested forecasts from Wall Street analysts.
Mining giant Freeport-McMoRan plummeted 6.3% as it reported a $2.9bn fourth-quarter loss, primarily due to a $3.4bn charge on the value of oil properties. Lower metals prices also marred results.
Large banks were hit hard in the sell-off. Citigroup lost 1.5%, while Bank of America shed 1.8%.
In the tech sector, Oracle fell 1.8% and Intel sank 4.7%. Apple fell 1.6% ahead of its earnings announcement following the market close.
Bond prices gained. The yield on the 10-year US Treasury fell to 1.76% from 1.82% on Monday, while the 30-year dropped to 2.34% from 2.40%. Bond prices and yields move inversely.
