(CNBC) -- Stocks fell on Tuesday as corporate results from Caterpillar and 3M disappointed investors, but the market managed to recover most of its losses later in the session as investors rotated into McDonald's and defensive stocks like Procter & Gamble.
The Dow Jones Industrial Average closed 126 points lower while the S&P 500 was down 0.6 percent. The Nasdaq Composite, meanwhile, closed 0.4 percent lower and was briefly positive. The small-caps Russell 2000 dropped 0.8 percent and turned negative for the year.
At its session lows, the Dow had fallen 548.62 points, while the S&P 500 and Nasdaq had lost more than 2 percent each. The comeback was led by McDonald's, which rose more than 6 percent on strong earnings, and a 0.7 percent gain in Procter & Gamble. Coca-Cola also rose 0.9 percent while the S&P 500 consumer staples sector climbed 0.4 percent.