Caterpillar declined after the construction and mining equipment maker reduced its 2015 earnings expectations, citing the slower-than-expected growth in the global economy. (Read More: What Caterpillar's Warning Means for Global Growth)
The news follows lowered outlooks by transportation companies FedEx and Norfolk Southern in recent weeks.
Facebook fell for a second day following a weekend report from Barron’s that the stock remains overvalued.
Apple also dropped for a second session.
Advanced Micro Devices tumbled to hit a 52-week low after FBR Capital Markets cut its price target on the chipmaker from $7.50 to $6, and also lowered its guidance for the company. Other semiconductor stocks including Texas Instruments and Micron also declined.
Google reversed earlier gains to close lower. The search-engine giant hit an all-time high above $760 a share earlier in the session. (Read More: Google Says Maps Not Waiting in Wings for iPhone 5)
Meanwhile, Research In Motion bucked the trend, gaining more than 4 percent after the smartphone maker's CEO said the company added about 2 million subscribers over the last quarter. Still, shares of the BlackBerry maker have struggled over the last year, plunging more than 50 percent year to date.
Staples slumped after the office products retailer said it is speeding up the closure of some of its stores in the U.S. and Europe.
Barnes & Noble said it is launching a video streaming and download servicethis autumn for its Nook e-books and device business.
On the economic front, home prices edged higher for a sixth-consecutive monthin July, according to the S&P/Case Shiller composite index of 20 metropolitan areas. Also, home prices rose for the seventh straight month in July, according to the Federal Housing Finance Agency's monthly home-price index. (Read More: Is Housing Risen From Ashes? 'The Industry Has Come Back')
Adding to economic optimism, consumer confidence bounced to its highest level in seven months in September, according to the Conference Board.
Treasury prices remained mixedafter the government auctioned $35 billion in 2-year notes at a high yield of 0.273 percent and a bid-to-cover of 3.60.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter:
Coming Up This Week:
WEDNESDAY: Weekly mortgage apps, new home sales, oil inventories, 5-yr note auction
THURSDAY: Durable goods orders, GDP, jobless claims, pending home sales, 7-yr note auction, farm prices; Earnings from Discover Financial, Nike, Accenture, Research In Motion, Micron
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment; Earnings from Walgreens
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