Greece was also in focus as German Chancellor Angela Merkel was greeted by protests over austerity measures during her first visit to the country since the debt crisis began. Uncertainty about Spain's bailout plans persisted as well. The Dow Jones Industrial Average closed down 110 points, or 0.81%, at 13,473. The blue-chip index, which has now fallen two straight days, is still up 10.3% so far in 2012. Breadth within the Dow was very negative with losers ahead of winners, 27 to 3. The biggest percentage decliners were Intel ( INTC), Microsoft ( MSFT), and Johnson & Johnson ( JNJ). Johnson & Johnson shares finished down 1.5% after the stock was cut to sell from neutral at Goldman Sachs, which said the drugs giant's growth potential is already reflected in the price and that the company needs more "transformational pipeline opportunities." Boeing ( BA), McDonald's ( MCD), and Alcoa ( AA) were posting gains. Shares of Alcoa were up marginally in after-hours action after the aluminum producer -- the first Dow component to report each quarter -- delivered a surprise profit, helped by productivity improvements and strong sales. James Kee, president and chief economist of San Antonio's South Texas Money Management believes the low expectations about the third quarter, which is anticipated to see the first year-over-year earnings decline for the S&P 500 since the third quarter of 2009, could work in the favor of the companies who do manage to exceed estimates. "We don't really expect to see that for companies in general though -- maybe a couple of handful of core companies if they beat for whatever reason," he said. "It'd be a much bigger event because of the pessimism." Kee thinks the companies that miss expectations will likely be those with more international exposure given the slowdown in China. The S&P 500 lost more than 14 points, or 0.99%, to settle at 1441.48, while the Nasdaq saw the deepest selling, dropping more than 47 points, or 1.52%, to finish at 3065.
NEW YORK ( TheStreet) -- The major U.S. stock averages finished just above session lows Tuesday as the International Monetary Fund's downgrade of its global economic outlook added to investor skittishness heading into the start of the new earnings season.