U.S. stocks dropped sharply on Tuesday as corporations reported earnings that disappointed and orders for U.S. business equipment unexpectedly declined in December.

“If you live in the northeast, and you work from home, you’re trying to figure out why the market is down 400 points,” Art Hogan, market strategist at Wunderlich Securities, referring to the snowstorm that halted transit in and around New York City overnight before ending earlier Tuesday.

“It’s a combination of an increase in volatility when you have a decrease in volume, and a transition period between seeing the ill effects of lower energy prices on companies hurt by the stronger dollar and weaker commodity prices, before we see the benefits of better consumer spending,” said Hogan, who believes lower gasoline prices will eventually translate into increased discretionary purchases.

Caterpillar (CAT) fell after the Dow component and maker of mining and construction equipment reported a lower profit short of estimates. Microsoft (MSFT) declined as the software maker’s results weighed, and Procter & Gamble (PG) dropped after the consumer-products maker reported a decline in quarterly profit as the stronger dollar dented sales overseas.

Orders for business equipment fell 3.4 percent last month, illustrating the impact of the slowing global economy on U.S. multinationals.

“At first blush, this is a terrible report and we’ll have to go back and revise our Q4 GDP estimate. The odds of GDP printing 3.5 percent or more for the fifth quarter in the last six are now virtually nil,” Dan Greenhaus, chief strategist at BTIG emailed.

“This report is always volatile so we hesitate to read too much since many other data points are telling another story. Nonetheless, this is not a good report,” Greenhaus added.

Consumer confidence came in at 102.9 in January, the best read since August of 2007, while new-home sales came in at 481,000 in December.

Separately, home prices in 20 cities rose 4.3 percent in November, according to the S&P/Case-Shiller index of property values.

After dropping nearly 400 points to a four-week low, the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) dropped 291.49 points, or 1.7 percent, to 17,387.21, with Microsoft and Caterpillar pacing blue-chip losses.

The S&P 500 (^GSPC) dropped 27.53 points, or 1.3 percent, to 2,029.56, with technology and industrials the leading laggards among its 10 major sectors.

The Nasdaq (^IXIC) shed 90.27 points, or 1.9 percent, to 4,681.50.

On the New York Mercantile Exchange,gold futures for February (CEC:Commodities Exchange Centre: @GC15G) rose $ 12.30, or 1 percent, to close at $ 1,291.70 an ounce. Oil futures rose $ 1.08 at $ 46.23 a barrel.

On Monday, U.S. stocks finished modestly ahead after the first weekly gain for equities in 2015, as investors mulled results from Greek elections and winter weather on the East Coast.

Read More Stocks finish mildly higher as energy offsets tech

Coming Up This Week:


2 p.m.: FOMC announcement


8:30 a.m.: Weekly jobless claims

10 a.m.: Pending-home sales for December


8:30 a.m.: Fourth-quarter GDP

9:55 a.m. Consumer-sentiment index for January

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