Dow Jones Industrial Average Drops As International Business Machines Corp (IBM) Sinks On Mixed Q3 Earnings

This story was updated at 4 p.m. EDT

U.S. stocks closed lower Tuesday, with the Dow Jones Industrial Average snapping a three-day winning streak, as Wall Street continued to weigh mixed corporate earnings in the technology sector. Shares of Dow component International Business Machines Corp. (NYSE:IBM) dropped nearly 6 percent Tuesday, a day after the technology company posted a 14 percent decline in revenue, driven by a strong U.S. dollar and weakness in hardware sales.

After falling roughly 80 points following the opening bell, the Dow reversed and gained as much as 36 points in morning trading after United Technologies Corporation (NYSE:UTX) jumped 4 percent, helping push the blue-chip index higher. The U.S. aerospace and building systems conglomerate beat earnings forecasts and announced plans to restructure company before the end of the year.

However, the Dow reversed again in afternoon trading to trade flat.

Four of the 10 sectors in the Standard & Poor's 500 index traded lower, led by a 1.5 percent decline in healthcare stocks. The telecom sector rose roughly 1 percent after Verizon Communications Inc. (NYSE:VZ) topped Wall Street's earnings estimates.

The Dow Jones Industrial Average (INDEXDJX:.DJI) lost 13.36 points, or 0.08 percent, to close at 17,217.18. The Standard & Poor's 500 index (INDEXSP:.INX) edged down 2.89 points, or 0.14 percent, to end at 2,030.77. The Nasdaq composite (INDEXNASDAQ:.IXIC) fell 24.5 points, or 0.5 percent, to finish at 4,880.97.

Market professionals awaited a speech from Federal Reserve Chair Janet Yellen, searching for more clues on the timing of the U.S. central bank’s looming interest rate increase. However, Yellen, who spoke Tuesday at the Labor Hall of Honor Induction Ceremony in Washington, D.C., made no mention about current U.S. economic conditions in her prepared remarks.

Meanwhile, Fed Governor Jerome Powell also spoke Tuesday at the New York Fed to a conference on the evolving structure of the Treasury market, saying investors are concerned about less liquidity in the bond market.

"Most market participants perceive some reduction in liquidity," Powell said in prepared remarks. "Views on the severity of the situation seem to be more mixed."

The Fed is scheduled to hold its next two-day meeting on Oct. 27-28. In September, the central bank left interest rates unchanged but remained open to a hike as soon as October.

Shares of Verizon Communications Inc. (NYSE:VZ) rose 1.5 percent after the largest U.S. wireless service provider turned in stronger-than-expected quarterly revenue and profit, driven by increased postpaid subscribers in the third quarter.

In the quarter ended Sept. 30, net income attributable to Verizon rose to $4.04 billion, or 99 cents per share, on revenue of$33.16 billion, up from $3.70 billion, or 89 cents per share, on sales of $31.59 billion a year earlier.

Yum! Brands Inc. (NYSE:YUM), the parent of KFC, Pizza Hut and Taco Bell, announced Tuesday it plans to spin off its China unit into a separate publicly traded company. Following the announcement, shares of Yum! Brands rose 4 percent on the New York Stock Exchange.

Notable companies reporting quarterly results after the closing bell include Yahoo! Inc. (NASDAQ:YHOO) and Chipotle Mexican Grill Inc. (NYSE:CMG).

U.S. housing starts rose more than expected in September, marking the sixth straight month the metric remained above 1 million units, signaling a stable housing recovery. Groundbreaking on new homes rose 6.5 percent to a seasonally adjusted annual pace of 1.21 million units, up from the 1.13 million-unit rate in August, the Commerce Department said Tuesday.

The data also showed the number of building permits issued in September fell by 5 percent from the prior month to its lowest level since March, signaling there appear to be some signs of caution from homebuilders. However, separate data issued Monday showed homebuilder confidence rose to its highest level in a decade in September, suggesting the outlook for housing starts is positive.

“While the number of building permits issued dropped back to a six-month low, the fact that homebuilder confidence is at its highest level in a decade suggests that the upward trend in housing starts is set to continue,” Stephen Brown, property economist at Capital Economics, said in a research note Tuesday.