NEW YORK (TheStreet) -- The major U.S. stock averages suffered steep losses Tuesday after a Federal Reserve official said he believes it's unlikely the central bank's third round of quantitative easing will meaningfully boost the economy.

"We are unlikely to see much benefit to growth or to employment from further asset purchases," said Philadelphia Fed President Charles Plosser, according to the published text of a speech to be delivered before the CFA Society and the Bond Club of Philadelphia.

Plosser, a well known hawk on monetary policy, also said the open-ending bond buying program could ultimately hurt the Fed's credibility.

The comments teamed with a cautionary outlook from heavy equipment giant Caterpillar ( CAT) to dampen investor sentiment and offset an early positive influence on trading from strong data on consumer confidence and housing.

The Dow Jones Industrial Average fell more than 101 points, or 0.75%, to close at 13,458. The blue-chip index, which has now lost ground in the three straight sessions, ranged as high as 13,620 earlier in the session and closed just above its low for the day.

Breadth was very negative with laggards outpacing advancers, 25 to 5. The biggest decliners were Caterpillar, Hewlett-Packard ( HPQ), Alcoa ( AA) and United Technologies ( UTX).

Shares of Caterpillar shed more than 4% after the company took a measured view of the global economy over the next few years, issuing a 2015 forecast that's below current Wall Street expectations.

Home Depot ( HD), Pfizer ( PFE), and Johnson & Johnson ( JNJ) were among the few Dow gainers.

The S&P 500 finished down more than 15 points, or 1.1%, at 1441.59, while the Nasdaq slid 43 points, or 1.4%, to settle at 3118.

The weakest industry areas of the broad market were technology, capital goods and basic materials as every sector finished lower. Volume totaled 3.68 billion on the Big Board and 1.98 billion on the Nasdaq.

Stocks were in the green for most of the morning, boosted by a batch of encouraging economic reports.

The Conference Board's Consumer Confidence Index rebounded in September back to levels seen earlier this year with the index now standing at 70.3, better than the consensus expectation of 63, and above the upwardly-revised 61.3 level in August.

"Consumers were more positive in their assessment of current conditions, in particular the job market, and considerably more optimistic about the short-term outlook for business conditions, employment and their financial situation," Lynn Franco, director of economic indicators at The Conference Board said in a press release. "Despite continuing economic uncertainty, consumers are slightly more optimistic than they have been in several months."

"Thanks to the continued rally in equity prices, the Conference Board measure of U.S. consumer confidence shot up to a seven-month high," said Amna Asaf, an economist at Capital Economics.

Asaf further noted that the decline in the balance of households saying that jobs are hard to find compared with those saying that jobs are plentiful suggests that there is scope for the unemployment rate to fall slightly.

At the same time, the economist cautioned that while the sharp rebound is overall very encouraging, it remains at a relatively depressed level compared with the historical average of 92.3, suggesting that consumption growth is likely to be a little better in the third quarter, "but hardly spectacular."

Wall Street was also parsing more evidence of the housing market recovery as the S&P/Case-Shiller 20-city home price index showed an annual return of 1.2% in July, marking the fastest pace of annual home price appreciation since August 2010 and beating the consensus of 1% and prior return of 0.6%.

"The tone and broad-based strength of this report are quite encouraging as they suggest that the housing market is continuing to sustain the recovery even at a time when the pace of jobs growth has remained weak," said Millan Mulraine, an economic strategist at TD Securities.

The read on the composite index was followed by the Federal Housing Finance Agency House Price Index, which showed that U.S. house prices rose 0.2% on a seasonally adjusted basis in July from June, after a downwardly-revised 0.6% increase.

In Berlin, European Central Bank President Mario Draghi and German Chancellor Angela Merkel met and talked about the creation of an independent European banking sector watchdog and next month's European Union summit, and agreed that there needs to be more willingness at both the individual state level and within the euro zone as a whole to carry out reforms; after which Draghi defended the ECB's latest bond-buying program.

The international markets were mixed Tuesday. The FTSE in London closed up 0.36% and the DAX in Germany finished up 0.16%. Hong Kong's Hang Seng index settled up 0.02% and the Nikkei in Japan closed up 0.25%.

The benchmark 10-year Treasury rose 12/32, pushing the yield down to 1.672%. The greenback was up 0.16%, according to the dollar index.

November crude oil futures settled down 56 cents to $91.37 a barrel, while December gold futures gained $1.80 to settle at $1,766.40 an ounce.

In corporate news, Enterprise Products Partners ( EPD) shares fell 2.1% after the Houston-based the oil-and-gas pipeline operator said it has priced a public offering of eight million common units representing limited partner interests and proceeds will be used to temporarily reduce borrowings under its multi-year revolving credit facility and for general partnership purposes.

Carnival ( CCL) shares rose 0.22% after the cruise company posted third-quarter earnings that surpassed Wall Street estimates and noted that cruise prices could rebound next year.

Red Hat ( RHT), the software maker, on Monday came in a penny short of Wall Street's profit expectations for its fiscal second quarter. Shares were down 4.2%.

Paychex ( PAYX), the payroll processor, on Monday posted fiscal first-quarter earnings that narrowly topped analysts' estimates. Shares fell 2.7%.

Forward Air ( FWRD) shares tumbled 11.4% after transportation and logistics company reduced its third-quarter outlook, citing softer-than-anticipated airport-to-airport volumes, which has been hurt by macroeconomic weakness.

Tesla ( TSLA) shares plummeted 9.4% after the electric vehicle company slashed its full-year revenue estimates.


--Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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