The Nasdaq Composite was down 44.19 points, or 0.69 percent, at 6,326.27.
Wall Street also is reacting to a flare-up in tensions after North Korea threatened to launch a missile strike aimed at US territory Guam, underlining deteriorating relations between Washington and Pyongyang.
"Trump's comments about North Korea have created nervousness and the fear is if the president really means what he said "fire and fury".
North Korea seemed unfazed by the president's bluster, however, as state media carried a statement indicating the communist nation is "carefully examining" a plan to strike the U.S. Pacific territory of Guam.
The tough talk came amid reports that North Korea had developed technology to miniaturize a nuclear warhead that could be placed in a intercontinental ballistic missile.
Second-quarter earnings have been stronger than expected with analysts now expecting S&P 500 earnings to have expanded 11.8 percent, up from 8 percent at the start of July, according to Thomson Reuters I/B/E/S.
On the US economic front, the Labor Department released a report showing labor productivity increased by slightly more than expected in the second quarter.
The report said labor productivity climbed by 0.9% in the second quarter after inching up by a revised 0.1% in the first quarter. Economists had expected job openings to drop to 5.6 million.
Stocks fluctuated over the course of the trading session on Tuesday before eventually closing modestly lower.
Networking, semiconductor, and internet stocks are also seeing some weakness, while gold stocks are moving notably higher amid a jump by the price of the precious metal.
Declining issues outnumbered advancers on the NYSE by 1,859 to 737. It fell to as low as 2,371.28 earlier, its lowest intraday level since June 23.
The December gold contract was ahead $16.70 to US$1,279.30 an ounce.
Markets in Canada's largest centre were set to follow global markets lower on Wednesday as investors held back from betting on riskier assets amid escalating North Korea tensions. Japan's Nikkei 225 Index tumbled by 1.3%, while Hong Kong's Hang Seng Index fell by 0.4%.
Telecom, chemical, and brokerage stocks also saw notable weakness, while most of the other major sectors showed more modest moves. While the German DAX Index rose by 0.3%, the French CAC 40 Index and the UK's FTSE 100 Index edged up by 0.2% and 0.1%, respectively.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.29 percent.
Safe-haven assets gained following the mounting geopolitical tensions.