Stocks closed lower for the third session Tuesday after shrugging off the latest Fed minutes even as some officials raised the possibility of further easing and following news that Moody's downgraded Ireland's rating, raising more contagion fears.
The Dow Jones Industrial Average fell 58.88 points, or 0.47 percent, to end at 12,446.88, falling for a third-straight day after fluctuating for most of the session.
Boeing and Intel led the blue-chip laggards.
The S&P 500 declined 5.85 points, or 0.44 percent, to close at 1,313.64.
The tech-heavy Nasdaq slid 20.71 points, or 0.74 percent, to finish at 2,781.91.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, was jumped near 20.
Among key S&P sectors, industrials and techs slipped, while utilities gained.
Moody's cut Ireland's credit rating to junk status, saying the country will likely need further official financing before it can return to international capital markets.
European Union leaders are expected to hold an emergency meetingon Friday after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion to Italy and Spain.
Meanwhile, some Fed officials said they arewilling to provide more monetary policy easingif the recovery continues to slow, according to the latest minutes of their June meeting. Fed officials also said they expect the economy would pick up in the second half of the year.
"Just the pure mention of QE3 is a positive for the equity markets—we saw the big rallies we got off the first QEs that we had," Warren Meyers, former CEO at Walter J. Dowd told CNBC. "But once that's over with, everyone comes back to reality. We're just beginning earnings season and there's so many issues going on with the data coming out with the U.S. and the global issues. We're due to pullback a bit and mellow out."
Alcoa closed lower after the aluminum maker posted a profit in line with forecasts but reported a disappointing outlook. Meanwhile, UBS cut its price on the firm to $16.25 from $16.75. The Dow component unofficially kicked off the second-quarter earnings season.
JPMorgan , Google and Citigroup are among major companies expected to report later this week.