On the economic front, mortgage applications edged up last week as potential buyers crept back into the housing market even though rates continued to climb, according to the Mortgage Bankers Association.
And consumer credit rose by $13.8 billion to $2.8 trillion in June, according to Federal Reserve data. Economists polled by Reuters had expected consumer credit to rise $15 billion during the month.
Treasury prices held their gains after the government auctioned $24 billion in 10-year notes at a high yield of 2.62 percent. The bid-to-cover ratio, an indicator of demand, was 2.45, the weakest since March 2009.
(Read more: Cashin: Here's what's making markets nervous today)
Among earnings, Walt Disney declined after the media conglomerate edged past earnings expectations but projected a massive loss related to its summer film, "The Lone Ranger." Analysts were mixed on the stock—Bernstein raised its price target on the company to $76 from $73, while RBC cut its target price to $71 from $72.
Time Warner rose after the media corporation beat earnings and revenue forecasts. In addition, the company said it expected mid-teens percentage earnings growth for the full year, up from the low double-digit estimates it previously provided.
Meanwhile, First Solar plunged to lead the S&P 500 laggards after the solar company posted quarterly results that were below expectations and cut its full-year outlook.
Groupon, Green Mountain Coffee Roasters, Mondelez International, Tesla Motors and Transocean are among notable companies slated to post results after the closing bell.
In Asia, the Nikkei ended below the key 14,000 level and the Japanese yen hit a six-week high against the dollar. Australia's S&P ASX 200 index and South Korea's Kospi hit two-week lows.
Meanwhile, the Bank of Japan began a two-day policy meeting on Wednesday with an outcome due on Thursday. While analysts expect no action, the direction of the yen will hinge on the central bank's statement.
Shares in Europe closed lower amid concerns that both the U.K. and U.S. central bank may tighten monetary policy earlier than anticipated. Bank of England's Mark Carney unveiled U.S. Fed-style forward guidance, and said Britain's central bank will not raise interest rates until U.K. unemployment hits 7 percent.
Meanwhile, Fitch affirmed Germany's rating at 'AAA' with a stable outlook.