By Mark DeCambre and Victor Reklaitis, MarketWatch

Weak data out of China set a dour tone for U.S. stocks

U.S. stocks ended modestly lower on Tuesday, trading within a narrow range and switching between small gains and losses throughout the day, ahead of a series of earnings reports.

Ultimately, stocks settled lower snapping a seven-day streak of gains for the Dow industrials and four consecutive days of advances for the S&P 500 and the Nasdaq Composite.

The Dow Jones Industrial Average slumped 49.97 points, or 0.3%, to close at 17,081.89, dragged lower by declines in Merck & Co. Inc. (MRK), which closed down 2.5%, and United Technologies Corp. (UTX), which finished off 1.2%.

The S&P 500 sank 13.77 points, or 0.7%, to 2,003.69, but stayed above the psychologically significant 2,000 level. Health care and industrial stocks led losses in the broad stock-market index.

Meanwhile, the Nasdaq Composite Index slumped 42.03 points, or 0.9%, to end at 4,796.61.

The seesawing action in stocks comes as skittish investors awaited a batch of corporate earnings--much of which came after the close of Tuesday trade--and economic reports to gauge the health of the U.S. economy amid a global economic slowdown.

"I think we are just kind of treading water here, right now," Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch. "We've had a pretty good run-up over the past couple of weeks and I think...people are taking a wait-and-see approach here to see how the numbers turn out," he said.

Earlier, news of China's exports and imports falling in September (http://www.marketwatch.com/story/china-exports-imports-fall-in-september-2015-10-13) helped dragged stocks lower, amid fears about the extent of the struggles of the world's No. 2 economy. The weak Chinese trade reading "led Asia to close in the red," with Europe and U.S. futures also lower, said Nour Al-Hammoury, chief market strategist at ADS Securities, in a note early Tuesday.

"I don't think investors really know the direction of the economy," said Paul Zemsky, chief investment officer at Voya Investment Management, which manages about $210 billion in assets. Zemsky said he has been skittish about the market after a weaker-than-expected September employment report and is looking out for more employment data and corporate earnings for guidance. "Earnings might give us a clearer view of the market one way or the other," he said.

CMC Markets's Cieszynski warned that more choppiness could be ahead fueled by market uncertainty about the timing of the first interest-rate hike in nearly a decade.

"Fed speculation may also impact markets with the next big decision just over two weeks away now," Cieszynski said, referring to the Fed policy-making committee's two-day meeting beginning Oct. 27, when Fed officials will have another opportunity to consider raising benchmark interest rates.

In corporate action, shares of Molson Coors Brewing Co. (TAP) soared nearly 10% as a proposed $104 billion mega beer-industry deal between (http://www.wsj.com/articles/sabmiller-ab-inbev-agree-on-deal-in-principle-1444717547?cb=logged0.8621699016075581) Anheuser-Busch InBev NV (ABI.BT)(ABI.BT) and SABMiller (SAB.JO) (SAB.JO) moved closer to fruition.

Movers & shakers: Shares of Johnson & Johnson(JNJ) closed 0.6% lower even as the company posted adjusted earnings per share of $1.49 (http://www.marketwatch.com/story/johnson-johnson-beats-earnings-expectations-raises-outlook-2015-10-13), above the FactSet consensus of $1.43, while also raising its outlook.

Other markets:Most Asian markets dropped (http://www.marketwatch.com/story/asian-shares-weaker-after-china-export-data-signals-slowdown-2015-10-13) after the soft Chinese trade data, though the Shanghai Composite ended slightly higher. Elsewhere, the Stoxx Europe 600 (http://www.marketwatch.com/story/european-stocks-veer-toward-lowest-close-in-almost-two-weeks-2015-10-13) fell 0.9% as the closely watched ZEW survey showed a drop in German economic sentiment.

Gold futures extended their gains to a third session (http://www.marketwatch.com/storyno-meta-for-guid), while modest gains for oil futures faded late in the session (http://www.marketwatch.com/storyno-meta-for-guid) and a key U.S. dollar index fell to 94.75 (http://www.marketwatch.com/story/yen-higher-against-dollar-rivals-as-risk-appetite-wanes-2015-10-13) from 94.88 late Monday in New York.

The U.S. economy: St. Louis Federal Reserve President James Bullard said in a speech early Tuesday that the Fed should gradually raise interest rates (http://www.marketwatch.com/story/feds-bullard-calls-for-gradually-edging-rates-higher-2015-10-13). He will be a voting member of the Fed's policy-making body in 2016.

Meanwhile, Fed Gov. Daniel Tarullo said he doesn't expect conditions to be appropriate (http://www.marketwatch.com/story/feds-tarullo-says-he-doesnt-expect-to-raise-interest-rates-this-year-2015-10-13) to raise interest rates this year, during an interview on CNBC.

A reading on small business optimism was little changed (http://www.marketwatch.com/story/small-businesses-still-not-very-optimistic-nfib-says-2015-10-13) in September, edged up 0.2 points to 96.1. That is still below the 42-year average of 98. There were no top-tier U.S. economic releases scheduled for Tuesday.

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(END) Dow Jones Newswires

October 13, 2015 17:25 ET (21:25 GMT)