Shares of Microsoft fell 3.9% after it warned that growth in its lucrative cloud business could stall, while its PC unit continued to struggle. The S&P 500 technology index shed 2.1% to lead declines among the 11 major sector indexes.

Amazon.com Inc., Salesforce Inc. and ServiceNow Inc., which have substantial cloud businesses, fell between 2.5% and 4.5%.

Other major growth stocks, including Apple Inc., Alphabet Inc. and Tesla Inc., also dropped between 1.5% and 3.0%.

Growth stocks, however, have enjoyed a bounce in January after a battering last year, with investors now focused on earnings reports to assess the impact of the Federal Reserve's rate hikes and to gauge whether the renewed enthusiasm for these stocks will be sustained.

"The environment may look attractive because some of these cloud companies, like Salesforce, are down so much, but people are still skeptical because we're heading into weaker economic news," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

"We still have inflation, we still have the Fed raising interest rates, we're seeing companies laying off thousands of peoples ... We're not completely through the cycle yet."

An overwhelming majority of traders expect the Federal Reserve to raise interest rates by another 25 basis points in its meeting next week.

They now see the terminal rate peaking at 4.91% in June, even as Fed policymakers have repeatedly backed taking rates above the 5% level.

Data later in the week is likely to show December personal consumption expenditure index (PCE) fell 0.1% from a 0.1% rise in the prior month. Fourth quarter GDP advance numbers are also awaited.

Dow Jones Industrial Average constituent, Boeing Co. slipped 1.3% as the planemaker's losses widened in 2022 and it missed fourth-quarter revenue estimates.

At 10:07 a.m. ET, the Dow was down 227.63 points, or 0.67%, at 33,506.33, the S&P 500 was down 46.92 points, or 1.17%, at 3,970.03, and the Nasdaq Composite was down 220.49 points, or 1.95%, at 11,113.79.

Abbott Laboratories fell 0.7%, weighed down by lower-than-expected medical device sales in the fourth quarter.

In a bright spot, AT&T Inc rose 6.2% on higher-than-expected quarterly subscriber additions, while Textron Inc added 0.3% as revenue beat estimates, boosted by demand for its private jets.

News Corp. jumped 8.0%, leading gains on the S&P 500, after Rupert Murdoch withdrew a proposal to reunite News Corp. and Fox Corp.

Declining issues outnumbered advancers for a 3.92-to-1 ratio on the NYSE and for a 2.82-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and one new low, while the Nasdaq recorded 29 new highs and 16 new lows.