"They're using (earnings) as an excuse, but it's the broader issues that are driving it," Courtney said. "What's going to happen with the election, what's going to happen with the fiscal cliff? Europe is already in recession - are we going to go, too? That fear is driving a lot of the selling right now."
The so-called fiscal cliff is a combination of tax increases and government spending cuts that will take effect Jan. 1, and that could send the U.S. back into recession, unless Congress intervenes.
DuPont, Xerox and 3M were among the worst-performing stocks in the S&P 500 on Tuesday. DuPont slid $4.51 to $45.25. Xerox lost 36 cents to $6.67. 3M slipped $3.80 to $88.73. The exception was UPS, which rose $2.17 to $73.73.
Some of the disappointing revenue is because of weakness in foreign markets. Multinational companies are having a hard time selling to Europe, which has been hobbled by recession, and emerging markets like China and India, where growth is slowing. Businesses that had relied on growth there to offset weak U.S. consumer demand are being forced to come up with new strategies.
"The recession in Europe is very real," said Bernard Schoenfeld, senior investment strategist for Bank of New York Mellon Wealth Management in New York. "It's not going to disappear very quickly, and it will certainly negatively affect earnings of exporters in the United States."
Companies are also blaming some of the revenue declines on the stronger dollar. As the dollar gains value, as it has over the past year, the money that multinational companies make overseas translates into fewer dollars back at headquarters.
"They're feeling the pain of the stronger dollar," said Kathy Lien, managing director at BK Asset Management in New York. "Companies try to hedge, but they don't always hedge perfectly."
This earnings season alone, Google, Philip Morris, IBM and Coca-Cola Bottling Co. have complained that the stronger dollar has hurt revenue, Lien noted.
The price of crude oil fell to a three-month low, another sign that investors expect a weak economy. The yield on the benchmark 10-year U.S. Treasury note sank to 1.76 percent late in the day, from 1.82 percent Monday, as nervous investors sold stocks and shifted money into low-risk U.S. government bonds.
Among other stocks making moves Tuesday:
- Luxury handbag maker Coach was a bright spot, reporting higher revenue for the latest quarter. It jumped $3.98 to $58.15, one of the best performers in the whole market.
- Apple fell $20.67 to $613.36, more than 3 percent, after it released a smaller version of its iPad. It is meant to help Apple compete with Amazon's Kindle Fire and Google's Nexus 7, but Apple priced its tablet higher than the others, which could crimp sales.
Apple has the most sway on the S&P 500 and the Nasdaq composite, so a poor day for Apple's stock can heavily impact both indexes.