Global stocks fell on Monday on concerns about weak corporate results and outlooks, while the euro gained as a regional election in Spain was seen as helping the country clear a hurdle for international aid to ease the euro zone debt crisis.
Most U.S. stocks slipped after heavy-equipment maker Caterpillar Inc slashed its 2012 forecast for the second time this year and warned that the global economy was slowing more quickly than it had expected.
Caterpillar's outlook also helped oil prices retreat.
By midday, the S&P 500 was on track for a third straight decline after the benchmark index suffered its worst one-day fall since late June on Friday. The technology-rich Nasdaq traded slightly above break-even.
Peter Kenny, a managing director at Knight Capital in Jersey City, New Jersey, said with 15 days to go until the U.S. presidential election on Nov. 6, investors are hesitant, with the economy close to a stall and the euro zone still a concern.
"It's more of a wait-and-see. Once we have some clarity on the political front I think people are going to be more than willing to put some bets on the table," Kenny said.
The Dow Jones industrial average was down 25.65 points, or 0.19%, at 13,317.86. The Standard & Poor's 500 Index was down 2.87 points, or 0.20%, at 1,430.32. The Nasdaq Composite Index was up 4.39 points, or 0.15%, at 3,010.02.
Shares of Caterpillar traded like a roller-coaster as the bellwether for global growth rose and fell in rocky trade. Caterpillar was last up 1.1% at $84.77.
"Caterpillar is a cyclical stock, and there's always a battle between a slowdown in the economy and growth expectations," said Shawn Hackett, president at Hackett Financial Advisors in Boynton Beach, Florida. "The stock is extremely volatile during periods when the economic outlook is uncertain."
Caterpillar's sobering outlook on the global economy helped push European shares lower as it was similar to other companies in recent weeks. By the close in Europe, all STOXX Europe 600 sectors bar financials were in negative territory.
Caterpillar "is being treated as more macro than just a set of company results, and with a lack of other newsflow today, I think people are being cautious on the back of it," said Will Hedden, a trader at IG Markets.
In Europe, the FTSEurofirst 300 index of top European shares fell 0.5% to close at a provisional 1,106.60 points. The STOXX Europe 600 fell 1.1%.
European shares earlier had traded higher on renewed expectations Spain was moving closer to seeking a bailout, but the decline in U.S. equity markets pulled Europe down.
The euro rose after Spanish Prime Minister Mariano Rajoy's party retained an absolute majority in the parliament of his home region of Galicia on Sunday, a result seen as overcoming a hurdle on the path to a formal bailout request.
According to European officials and analysts, Rajoy had wanted to wait until the regional elections before requesting a bailout, which would trigger the European Central Bank's bond-buying program aimed at lowering Spain's high borrowing costs.
The euro was up 0.4% against the dollar at 1.3060.The U.S. dollar index fell 0.07% to 79.572.
Oil prices edged lower in choppy trade as economic concerns and expected production and pipeline restarts offset fears about Middle East turmoil and the potential threat to the region's supply.
The warning from Caterpillar weighed on crude prices, with Brent crude oil sliding below $110 per barrel.
Brent crude for December delivery was down 30 cents to $109.84 per barrel. U.S. oil was down 50 cents at $89.55 a barrel.
U.S. Treasury prices fell, taking back a portion of Friday's gains.
The benchmark 10-year U.S. Treasury note was down 9/32, the yield at 1.7976%.
