The Dow Jones Industrial Average fell about 0.5%. The S&P 500 saw similar losses, while the Nasdaq Composite moved back into positive territory in a see-saw trading session.
The major markets opened higher following stronger-than-expected earnings reports from Intel and Yahoo .
At least five research firms, including Goldman Sachs and Citigroup, raised their price targets on Yahoo, given strong third-quarter results for the Internet giant.
Intel reported a 43% jump in third-quarter profit late Tuesday, due in part to strong demand for personal computers. Some investors see the demand for computers as a good sign for the health of the companies Intel supplies with chips.
Fellow Dow components Altria, Coca-Cola, and JPMorgan Chase, issued strong quarterly results this morning, sending those stocks higher before the opening bell.
JPMorgan managed to post a 2.3 percent increase in its third-quarter profit, despite a $1.3 billion charge to write down its leveraged loans and credit loss provisions.
"What we're looking for (in earnings) is to continue to see the fact that the weak dollar isn't really penetrating our economy in the States the way we thought it would," said Jack Bourodjian of Capital Markets Technologies.
United Technologiesreported better-than-expected results for the third quarter but shares fell due to a disappointing outlook.
IBM shares after the company said on its earnings call that weaker sales to U.S. financial services customers cost it a percentage point of growth in the third quarter. IBM said that hurt sales of hardware and software, but that the problem did not affect its broader customer base.
Shares of Citigroup traded lower in volatile trading on unconfirmed speculation the bank's chief executive Charles Prince will step down. CNBC's Charlie Gasparino later reported that the bank said the rumor was untrue.
Cablevision Systems fell after the cable operator's biggest institutional investor said it will vote against the Dolan family's $10.6 billion buyout bid, becoming the third large investor to oppose the deal.
Thornburg Mortgage shares tumbled after the mortgage lender reported a loss and suspended its dividend on Tuesday after it said it lost about $1.1 billion in the third quarter from the sale of jumbo mortgages.
For-profit higher education company Corinthian Colleges said the U.S. Department of Education has sought documents and records at its National School of Technology campus in Fort Lauderdale, Fla. In a regulatory filing, Corinthian Colleges said it is cooperating with the investigation and it has not been informed as to why this action has been taken against it.
One day after oil topped $88, New York light crude futures soared to a new intraday high of $89 a barrel as investors worried about possible military action in northern Iraq and a potential supply crunch this winter. But the record rally stalled on Wednesday after an OPEC minister said the group could not rule out another output hike.
Meanwhile, the government said stockpiles rose by 1.8 million barrels last week, compared with analysts' forecast of a rise of 1 million.
European markets gained following strong U.S. corporate earnings reports, while Asian stocks traded mostly lower with shares in India plunging 9% after Indian authorities sought to limit foreign fund inflows for the world's second fastest-growing economy.
In other economic news, the Labor Department reported that consumer prices rose at the sharpest rate in four months during September as energy costs picked up after three months of decline.
The Consumer Price Index, which is the most broadly used gauge of inflation, rose at a 0.3 percent rate last month. The CPI rose at a faster rate than the 0.2 percent increase that was expected and was the largest gain since a 0.7 percent jump in May. However, core CPI rose 0.2 percent in September, in line with economists' expectations.
U.S. home construction starts fell 10.2 percent in September to their lowest level in more than 14 years, according to the Commerce Department. Building permit activity, a sign of future construction plans also dropped to a level not seen since mid-1993.
U.S. Treasury prices rose on Wednesday as fresh evidence of a dismal U.S. housing market overshadowed data showing persistent inflation pressures, bolstering investors' hopes for an interest rate cut.