NEW YORK (TheStreet) -- Major U.S. stock markets slumped Tuesday as Republicans and Democrats failed to show any meaningful progress in negotiations to raise the nation's borrowing limit. Shortly after the close, Fitch Ratings placed the U.S. 'AAA' credit on rating watch negative.

The S&P 500 dropped 0.71% to 1,698.06. The Dow Jones Industrial Average dipped 0.87% to 15,168.01. The Nasdaq decreased 0.56% to 3,794.01.

Speaker John Boehner said earlier on Tuesday that Republicans and House Democrats continued to engage in dialogue about the debt ceiling and budget but that there was no guarantee for a resolution of the three-week old impasse.

Senate talks had paused by Tuesday afternoon as Senate Minority Leader Mitch McConnell waited to see if House Republicans would pass their own version of a deal, according to Politico, citing aides and senators close to the talks. At the closing bell of the markets, the House was still fleshing out a proposal.

In company news, Teradata  (TDC)posted the biggest loss in the S&P 500, plummeting 18% to $42.91 after the computer-data storage slashed its 2013 forecast to adjusted earnings per share in the range of $2.70 to $2.80 on essentially unchanged revenue versus 2012's $2.67 billion. The company said the lowered guidance reflects weak business performance in the Asia, Pacific and Japan markets as well as in the Middle East and Africa.

Charles Schwab (SCHW)was one of the top gainers in the S&P, surging 4.6% to $23.03 after the San Francisco-based discount broker forecast that it can achieve an outpacing of revenue growth over expense growth by about 300 to 500 basis points in fiscal 2014 as profit increased 17% to $290 million in the third-quarter.

FedEx  (FDX) jumped 4.1% to $120.08 after the shipping giant announced a new share repurchase program of up to 32 million of its outstanding shares of common stock.

FLIR Systems  (FLIR) plunged 13.8% to $28.59 after the imaging and sensor systems maker said that it plans to shut down up to six of the company's sites in the U.S. and Europe to help save more than $20 million a year amid expectations of a hit to third quarter results due to weakness in markets with exposure to the U.S. federal government. The company now expects 2013 revenue to fall in the range of $1.45 billion to $1.5 billion and adjusted net income to come in in the range of $1.38 to $1.43 a share versus the prior outlook of revenue of $1.5 billion to $1.6 billion and net income of $1.56 to $1.66 a share.

The benchmark 10-year Treasury was down 11/32, lifting the yield to 2.734%.

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