JCPenney spiked higher after the struggling department store chain posted a smaller decline in same-store sales for September, adding it sees positive signs in many areas of its business.
Talisman Energy soared after billionaire investor Carl Icahn Tweeted that he had purchased about 61 million shares of the oil producer and may seek a seat on the company's board.
Also, Nuance rose after Icahn said he had reached an agreement with the speech recognition software maker to seat two of his choices--one being his son Brett--to the company's board of directors.
Social media stocks tumbled across the board, with shares of Facebook, Yelp and LinkedIn all down sharply.
Meanwhile, two Federal Reserve officials expressed that they wanted the central bank to begin scaling back back asset purchases during their meeting in September. Cleveland Fed President Sandra Pianalto said the improvement in labor market conditions since the Fed launched the program in the fall of 2012 seemed "substantial enough" to support a tapering.
And at a separate event, Philadelphia Fed president Charles Plosser said economic conditions are now in place that should allow the Fed to quickly end its bond purchasing program.
The Treasury auctioned $30 billion in 3-year notes at a high yield of 0.710 percent. The bid-to-cover ratio, an indicator of demand, was 3.05, versus a recent average of 3.35. Benchmark 10-year notes were last down 3/32 in price to yield 2.643 percent. The yields have struggled to break below resistance at around 2.60 percent.
The auction was the first of a $64-billion supply this week. The Treasury will sell $21 billion in 10-year notes on Wednesday and $13 billion of 30-year bonds on Thursday.
Asian shares pared most of their early losses on Tuesday, as mainland Chinese and Hong Kong markets climbed in the first day of trade after the "Golden Week" public holiday.
Shares were lower in Europe meanwhile, with U.K. retailers trading down after the British Retail Consortium reported weaker sales growth. But technology stocks were higher, boosted by a bounce in shares of French company Alcatel-Lucent, which announced the latest part of its cost-cutting plan.