Before it pared back some of the losses
The companies that rattled the market included Microsoft, Caterpillar and Procter & Gamble. Some also forecast weaker results in months ahead.
An unexpected drop in U.S. orders of long-lasting goods also weighed on investors, briefly dragging the Dow Jones industrial average down 390 points early in the day before it pared back some of the losses. It was the biggest one-day decline for the blue-chip index since Jan. 5.
The downbeat company report cards raise concerns about corporate America's ability to grow profits at a time when many investors are expecting the resurgent U.S. economy to drive earnings should economic growth weaken overseas.
"That theme, 'Boy, this is the year earnings are going to come back,' suffered a little bit of a setback," said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute. "Investors are starting to worry that the stronger dollar and some the impacts of energy aren't always positive."
The Dow dropped 291.49 points, or 1.7 percent, to close at 17,387.21. It is now 3.7 percent below its record high of 18,053.71 on Dec. 26.
The Standard & Poor's 500 index lost 27.53 points, or 1.3 percent, to 2,029.56. It's down 2.9 percent from its high of 2,090.57 on Dec. 29.
The Nasdaq composite dropped 90.27 points, or 1.9 percent, to 4,681.50.
The major stock indexes got off to a rough start early on, each opening sharply lower as investors digested the company earnings news.
A report showing that sales of new U.S. homes accelerated 11.6 percent last month failed to veer the market from its slide.