U.S. stocks fell Tuesday after disappointing results at blue-chip companies like Microsoft Corp. and Caterpillar Inc. sparked concerns about the strong dollar’s drag on earnings growth. 
 
 Earlier in the session, the Dow Jones Industrial Average was down as many as 390 points, but in afternoon trading stocks pared some losses. 
 
 In recent trading, the Dow dropped 234 points, or 1.3%, to 17445. The S&P 500 declined 19 points, or 0.9%, to 2038, and the Nasdaq Composite lost 60 points, or 1.3%, to 4711. Meanwhile, the Russell 2000 index, the widely followed benchmark of small-cap U.S. companies, was down 0.2%. 
 
 Microsoft and Caterpillar contributed about 67 points to the Dow’s total decline. Microsoft shares fell 8.5% after the company set its financial forecast for the fiscal year, which ends in June, below Wall Street estimates, citing the strong U.S. dollar. 
 
 Caterpillar gave a disappointing 2015 outlook, citing tumbling oil, copper and coal prices, and reported fourth-quarter earnings that missed expectations. A stronger dollar is also hurting sales, the company said. Shares dropped 7.5%. 
 
 ENLARGE Microsoft shares were hit after the company forecast lower-than-expected earnings because of the strong U.S. dollar. Above, CEO Satya Nadella in October. Photo: Reuters 
 
 The surge in the U.S. dollar has helped drive current earnings season’s tepid outlook. The drop in oil prices and weak economic activity overseas are also contributing to low expectations. 
 
 Going into fourth-quarter earnings season, analysts polled by FactSet had expected earnings to rise 1.1% from a year earlier, which would mark the slowest quarterly pace of growth since the third quarter of 2012. Including 102 companies that have reported, the S&P 500 is on track to see earnings inch up 0.1% from a year earlier. 
 
 “This earnings season is starting to validate that these really big companies will start to see more headwinds,” said Andrew Slimmon, who oversees about $4.3 billion as managing director of Morgan Stanley Wealth Management’s Global Investment Solutions. “The stronger dollar is going to hurt big U.S. companies.” 
 
 Concerns about a strong U.S. currency are driving some investors to small-cap stocks. The sector lagged behind the broader market in 2014, with the Russell 2000 index ending the year up 3.5% compared with the S&P 500’s 11.4% rise. But with the strengthening U.S. dollar hurting multinational companies’ profits, some money managers say now may be the time to move money into small-cap names. 
 
 “U.S. small caps tend to do most of their business in the U.S., meaning they’re not as exposed to the stronger dollar,” said David Lebovitz, global market strategist for J.P. Morgan Asset Management, which manages $1.7 trillion. He added that some of these companies use imports to make their products, so the strong dollar could actually help their bottom line. 
 
 “There’s probably an opportunity in those more domestically-focused companies,” he said. 
 
 In the past week, the Russell 2000 has gained 2.4%, compared with the S&P 500’s 0.7% rise. 
 
 Several traders said market activity was heavier than they expected given the snowstorm that blanketed the New York City area and kept many in the city’s financial community at home. New York Stock Exchange operator NYSE Group Inc. invoked the rarely used “Rule 48,” which relaxes some trading rules in a bid to ensure a smooth opening to trading. 
 
 “I thought it would be dire today,” said Michael Antonelli, a sales trader at the Milwaukee office of investment bank Robert W. Baird. “I thought it would feel like a holiday today given a component of people being out. But with this incredible earnings action, markets are not dead by any stretch.” 
 
 “We’re on track for a normal day,” he said. 
 
 In other earnings news, Procter & Gamble Co. said Tuesday it expects currency volatility to reduce its 2015 sales by 5% and profit by 12%. Shares declined 3.7%. 
 
 Kent Engelke, chief economic strategist at Capitol Securities Management, Inc., said he has cut his forecast for profit at multinational companies because of the dollar’s strength. The dollar could get another boost if the Federal Reserve signals it remains on track to raise interest rates this year, he added. 
 
 The Fed begins its two-day monetary policy meeting on Tuesday and is scheduled to release a statement on Wednesday. 
 
 “If the Fed raises rates, the dollar should continue to rally, and that will impact profits negatively,” Mr. Engelke said. 
 
 U.S. economic data Tuesday also helped sour investor sentiment. The Commerce Department said orders for durable goods fell 3.4% in December from November. Economists surveyed by The Wall Street Journal had expected orders to climb 0.3%. 
 
 Declines in European stocks added to the negative tone. Nervousness about a potential showdown between Greece’s new government and its international creditors continued to grip Greek financial markets Tuesday, with stocks and bonds extending their postelection losses. The Stoxx Europe 600 fell 1%. 
 
 Assets considered havens rose Tuesday. Gold futures added 0.9% to $1290.80 an ounce. The yield on the 10-year Treasury note fell to 1.795% from 1.830% on Monday. Yields fall as prices rise. 
 
 In other markets, crude-oil futures rose 1.6% to $45.87 a barrel. 
 
 —Dan Strumpf contributed to this article. 
 
 Write to Corrie Driebusch at corrie.driebusch@wsj.com and Saumya Vaishampayan at saumya.vaishampayan@wsj.com a ||||| NEW YORK (MarketWatch) -- U.S. stocks opened sharply lower after a weaker-than-expected durable-good orders report triggered fears that economic growth is slowing. Durable-goods orders fell 3.4% in December, raising questions about whether businesses are really ready to ramp up investment in 2015. A string of disappointing earnings reports from the likes of Microsoft Corp., Caterpillar Inc., DuPont and Freeport-MoMoRan Inc. also dented sentiment. The S&P 500 SPX, +0.95% opened 23 points, or 1.2%, lower at 2,033. The Dow Jones Industrial Average DJIA, +1.31% dropped 263 points, or 1.5%, to 17,411. The Nasdaq Composite COMP, +0.98% began the day with a loss of 75 points, or 1.6%, at 4,695 
 
 Read the full story: U.S. stocks slide on weak data, earnings
– It's a miserable day on Wall Street so far, with the Dow plunging more than 370 points about an hour after the open. MarketWatch says one of the driving factors is a weak report on durable-goods orders, which suggests that businesses are worried about a slowdown rather than investing in growth. Also not helping: disappointing quarterly results from a slew of blue-chip companies, reports the Wall Street Journal. The Nasdaq and S&P 500 were down 2.2% and 1.7% respectively.