Yahoo! Spooks Tech Sector

Updated from 4:13 p.m. EDT

Late buying allowed stocks to pare their losses by Tuesday's close, but the upcoming Federal Reserve meeting and a profit warning from Internet giant Yahoo! (YHOO Quote) kept Wall Street from completely overcoming its earlier deficit.

The Dow Jones Industrial Average finished the session down 14.09 points, or 0.1%, at 11,540.91, and the S&P 500 gave back 2.87 points, or 0.2%, to 1318.31. The Nasdaq Composite halved its earlier decline and ended lower by 13.38 points, or 0.6%, at 2222.37.

The market hit its worst levels of the day when Yahoo!(YHOO Quote) Chief Financial Officer Susan Decker said at an investment conference that the company's third-quarter numbers would be in the bottom half of its projected range. In July, Yahoo! had said third-quarter revenue should be $1.12 billion to $1.23 billion.

Following her comments, Yahoo!'s shares slumped 11.2% to close at $25.75, and other Internet stocks were pulled down along with it. Google (GOOG Quote) lost 2.6% to $403.81, eBay (EBAY Quote) shed 3.5% to $25.95, and Amazon.com (AMZN Quote) surrendered 1.6% to $31.58.

Volume in Yahoo! easily exceeded 100 million shares and was six times the amount of stock traded on a normal day.

Even though the major averages ended in negative territory, a post-close announcement from Oracle (ORCL Quote) could provide some support for the tech sector heading into Wednesday. The software giant said after the bell that its quarterly profit rose 29%, and revenue jumped 30% thanks to its big acquisition spree.