U.S. stocks closed lower Tuesday, with the Dow Jones industrial average snapping a three-day winning streak, as Wall Street digested a slew of corporate earnings reports and U.S. housing starts data.
"It's been a take-no-prisoners earnings season," said Maris Ogg, president at Tower Bridge Advisors. "When you think about earnings season, you see the really good numbers right off the bat. ... That hasn't been the case (thus far)."
IBM reported earnings per share that were slightly above estimates on Monday, but its revenues came in far below consensus, pushing the stock down 5.75 percent to $140.64, its lowest levels since October 2010.
"IBM is a reflection of what's going on (with earnings) across the board," said Nick Raich, CEO of The Earnings Scout. "It's not a good start to earnings season."
"IBM is going to weigh on the Dow ... and will keep the market trapped," said Peter Cardillo, chief market economist at Rockwell Global Capital.
IBM shares intradaySource: FactSet
United Technologies, Travelers and Verizon, also reported quarterly results. Verizon and Travelers both beat Wall Street estimates for earnings and revenue, while United Technologies beat on earnings per share but missed on revenue.
"I think it will be interesting to see what the big-cap tech names have to say," said Zachary Karabell, head of global strategy at Envestnet.
U.S. stocks traded in a narrow range for most of the session after opening firmly lower. The Nasdaq Composite hit a session low of 4,866.6 as it tracked the iShares Biotechnology ETF (IBB), which closed down 3.16 percent
"The biotech sector is going to continue to be an in-and-out sector because there is a lot of risk there," said J.J. Kinahan, chief strategist at TD Ameritrade.
Investors also took in September housing starts data, which came in well above expectations at 1.206 million.
"The story remains the same in that single family home construction remains muted historically speaking as the current 740,000 level is well below the 30-year average of 1.04 million and this is not adjusted for population growth," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
"Multi family starts continue to react to the 4-5 percent annual rent increases, low vacancies and the secular drop in the homeownership rate. With 5 percent(ish) increases in existing home prices, they need to slow down further in order to create better competition to renting," he said.