Stocks retreated Tuesday as the global rally from the previous session lost momentum and euphoria over Europe's near $1 trillion debt rescue package faded.
The Dow Jones Industrial Average was down about 40 points, led by Merck, Alcoa and Intel .
Merck slipped after the company gave an update on its late-stage drug pipeline and a full year outlook.
Walt Disney was one of the only gainers on the Dow ahead of the entertainmnet giant's earnings, due out after the bell.
This came after the Dow gained 3.9 percent in the previous session, its best one-day gain in over a year. The Dow has now had triple-digit moves, either up or down, in eight of the past ten sessions, after registering only three triple-digit moves between March 8 and April 26 of this year.
Todd Schoenberger, managing director of LandColt Trading, said despite yesterday's rally, he's not a buyer right now.
"Volatility will rule the Street for the remainder of 2010. Top-line earnings are suspect, higher taxes are pending, houses are being foreclosed, and unemployment is super high," he said. "Sell now and hold on to the cash!"
The only area he likes is travel & leisure.
'The Dow Jones Travel & Leisure Index has more than doubled the S&P 500 this year," Schoenberger points out. "All of the nonsense taking place in the world must be pushing people to get away!"
European shares were lower in the wake of their massive surge during Monday's session with banking stocks giving back some of their gains. The Greek stock market, which jumped 9.1 percent Monday, fell more than 2 percent Tuesday, while Spain's market, which rose 14.4 percent Monday, was off 4.6 percent Tuesday.
Greece is expected to submit its request for the first installment of aid from both the European Union and the International Monetary Fund. Those funds will be used to refinance a 10-year bond issue that matures on May 19.
And Chinese inflation hit an 18-month highin April, raising the possibility of higher interest rates.
Oil fell slightly, trading between $76 an $77 a barrel. Gold shot up about $20 to $1,220 an ounce, approaching its all-time high above $1,226, as investors flocked to the metal as a safe-haven play.
Gold stocks advanced, including Randgold, Royal Gold and Jaguar Mining, all of which were up more than 2 percent.
Wholesale inventories rose 0.4 percent in March and wholesale sales jumped 2.4 percent, the biggest gain since November.
Two hearings to note on Capitol Hill today — one on the market's freefall last Thursday and another on the oil spill.
The Treasury is set to auction $38 billion in 3-year notes, with the results available shortly after 1 pm.
Google 's Android operating system is now the No. 2 most used smartphone software, displacing Apple. But Sprint says it will no longer sell Google's Nexus One smartphone. The No. 1 is from Blackberry maker Research In Motion .
In other news, investor Carl Icahn has increased his stake in the mobile phone maker Motorola , according to an SEC filing.
Big banks were lower. Goldman Sachs and JPMorgan were each down about 1 percent following news that the trading operations at both firms made money every single day of the first quarter— a first for both companies.
But regional banks showed strength, with Regions Financial, Fifth Third and SunTrust all higher.
Shares of Legg Mason were the biggest gainer on the S&P 500, up more than 10 percent. Stifel Nicolaus upgraded the stock to "buy" from "hold" after the asset manager reported its fourth straight quarterly profit and announced a restructuring plan.
Priceline tumbled over 10 percent after the travel-booking site reported its earnings more than doubled in the latest quarter but issued a disappointing forecast as global turmoil is threatening the travel industry.
Toyota shares rose slightly. The auto maker said it expects a smaller-than-expected profit for the current fiscal year, hurt by aggressive sales incentives, a rising Japanese yen, and Europe's debt problems. Separately, Toyota said it's reviewing NHTSA's investigation into a 2005 recall related to a steering wheel part, and also says it is cooperating with the investigation.
JA Solar rose after the company reported a sharp rise in quarterly profit and raised its outlook on strong demand for solar electricity-generating equipment.
After the bell, reports are due out from Disney and videogame maker Electronic Arts .
TUESDAY: Intel shareholder meeting; wholesale trade; Congressional hearings on market's freefall and oil spill; Fed's Rosengren, Lockhart speak; 3-year auction; earnings from Toyota
WEDNESDAY: Weekly mortgage applications; trade balance; weekly crude inventories; 10-year auction; Fed's Bullard speaks; earnings from Macy's
THURSDAY: Ford, Google shareholder meetings; weekly jobless claims; import/export prices; Fed's Kocherlakota speaks; 30-year auction; earnings from Kohl's, Nordstrom, Nvidia
FRIDAY: Government's retail-sales report; industrial production; consumer sentiment; business inventories; earnings from JC Penney
More From CNBC.com: