The latest data from China kept the tech companies' shares in the red in early trading, while chipmakers that have bigger exposure to China, were also trading lower.
The Bloomberg Dollar Spot Index climbed less than 0.1 percent.The euro increased 0.2 percent to $1.1433.The British pound declined 0.3 percent to $1.3158.The Japanese yen gained 0.2 percent to 109.29 per dollar.
The world's largest construction equipment manufacturer, Caterpillar's earnings per share of $2.55 largely underwhelmed the consensus forecast of $2.99.
President Trump is bent on curbing what Washington says is Beijing's deliberate theft of American intellectual property and trade secrets.
Caterpillar derives 59 percent of its sales from outside of the USA and almost a quarter of its revenue from the Asia Pacific region, according to figures from Goldman Sachs past year.
The Dow Jones Industrial Average fell 208.98, or 0.8 per cent, to 24,528.22.
Caterpillar, a bellwether for global industrials, fell 9.1 percent as its quarterly profit missed Wall Street estimates, hurt by softening Chinese demand, a strong dollar and higher manufacturing and freight costs.
Investors were already nervous about global growth after China reported overnight that industrial profits declined in December.
"With Caterpillar blaming China, investors are expecting to see more companies do the same in through the week", said Peter Cardillo, chief market economist at Spartan Capital Securities in NY. The reason behind this is speculated to be the Q4 earning of Caterpillar as the statistics show that the profit was lesser than what was initially expected.
"With the Chinese economy struggling the way it is and with companies feeling the impact, the U.S.is also starting to realise that there is enough motivation to get a deal done". The S&P 500 lost 29.04 points, or 1.09 percent, to 2,635.72 and the Nasdaq Composite dropped 98.00 points, or 1.37 percent, to 7,066.87.
A Federal Reserve policy decision and Brexit votes also loom, while the USA stepped up pressure on Venezuela's Nicolas Maduro by announcing sanctions on PDVSA. "North America is obviously the major market".
Declining issues outnumbered advancing ones on the NYSE by a 1.82-to-1 ratio; on Nasdaq, a 2.11-to-1 ratio favoured decliners.
Equity markets have solid underpinnings with fourth-quarter earnings looking good, a likely truce in the U.S.
"But the complication of volatility being uncomfortable and the fact we're later in the (business) cycle, that's why we're seeing these larger reactions to market news than we're used to", she said.
In the commodities market, USA crude oil fell 3.2 percent, to settle at $51.99 per barrel in NY.
The yield on 10-year Treasuries decreased two basis points to 2.74 percent.The two-year rate was little changed at 2.61 percent.Germany's 10-year yield gained two basis points to 0.21 percent.
Chief Financial Officer Andrew Bonfield told Reuters that profits this year will be weighed down by a higher USA tax rate.