The S&P 500 was down 0.73%, the Dow Jones Industrial Average slipped 0.66%, and the Nasdaq declined 0.77%.
Alcoa slumped 9% after missing earnings estimates in its recent quarter. The aluminum producer earned an adjusted 32 cents a share, a penny short of forecasts. Sales fell 6% to $5.213 billion, lower than an estimated $5.325 billion.
Alcoa marks the unofficial kickoff to the earnings season. The most recent three-month range is expected to show another decline in S&P 500 earnings, though a shallower drop than recent reporting periods.
"Expectations are that earnings will improve in this quarter although they may still be negative," Dan North, chief economist at Euler Hermes North America, told TheStreet. "A trailing [price-earnings ratio] of 20 is inflated, and earnings growth had better come soon. We may well get that growth in 2017 if we see a return to growth in the energy sector due to a base effect."
S&P 500 companies are expected to report a 0.8% decline in aggregate third-quarter operating earnings, according to Sam Stovall, chief equity strategist at S&P Global Market Intelligence. Another drop would mark the fifth quarter in a row of earnings declines, a recession not seen since 2009. Consumer staples, financials, materials and utilities are expected to post growth, while the energy sector will continue to be a drag. Excluding energy, earnings growth would likely be 2.5%.
Crude oil prices fell early Tuesday, pulling back from a rally of more than 1% seen a day earlier. Prices had jumped on Monday after Russian President Vladimir Putin said the country would participate in the Organization of Petroleum Exporting Countries' plan to limit production. Russia is not part of OPEC, though frequently joins discussions over production.
OPEC agreed to limit production at a meeting last month in order to correct a supply glut and recover from the commodity market's multi-year lows. However, production remains at record highs as individual countries struggle to rein in output. OPEC oil production increased by 160,000 barrels to 33.6 million barrels per day in September, according to the latest International Energy Agency monthly report.
West Texas Intermediate crude oil was down 0.5% to $51.09 a barrel.
Apple (AAPL - Get Report) climbed more than 1% as Samsung's (SSNLF) Galaxy Note 7 woes continued. Samsung confirmed Tuesday that it would permanently discontinue the production and sales of its smartphone after a high-profile scandal in which units would spontaneously burst into flames. Apple is Samsung's chief competitor in the smartphone space.
Salesforce (CRM - Get Report) reportedly still is mulling a bid for Twitter (TWTR - Get Report) despite reports indicating the cloud software company had pulled out of negotiations. Salesforce could offer a lowball offer to Twitter given its stock's weak performance, according to Reuters. Other potential bidders including Alphabet's (GOOGL - Get Report) Google and Walt Disney (DIS - Get Report) fell short of making an offer.
Twitter was upgraded to hold from sell at Evercore. Analysts said the move was tied to a recent selloff. Shares have dropped more than 20% since over the past five sessions as potential suitors reportedly backed out of the bidding process.
Yum! Brands (YUM - Get Report) moved higher on Tuesday after detailing its plans to drive growth at its fast-food chains once it separates from its China business. Operations in the region are expected to become separate as of the close of business on Oct. 31. The owner of KFC and Taco Bell said its resulting business will operate as a "pure play" franchisor, making it more efficient and capital light. Yum aims to increase franchise restaurant ownership to 93% by the end of the month, up from 77%.
Illumina (ILMN - Get Report) slumped 25% on Tuesday after reducing its third-quarter revenue forecast to $607 million, down from its previous range of $625 million to $630 million. The biotech company also said it expects fourth-quarter sales to come in flat to up slightly.