By Asjylyn Loder and Lauren Almeida 

U.S. stocks fell Wednesday as the start of earnings season exposed some weakness in companies, potentially damping investors' outlook for economic growth.

The S&P 500 declined 0.4%, the Dow Jones Industrial Average slipped 0.2% and the Nasdaq Composite fell 0.1%.

Companies reporting earnings have voiced concern about their growth prospects, as they face a muddy economic outlook and a high-profile trade dispute between the U.S. and China.

Major benchmarks had rallied to record heights since Federal Reserve Chairman Jerome Powell signaled last week that the central bank would likely cut interest rates as early as this month. He strengthened those expectations this week when he told an audience in Paris that the central bank is "carefully monitoring" the risks to U.S. growth.

But the market has already priced in the Fed's move and investors are now focused on the financial outlook for U.S. companies, said Peter Cecchini, chief market strategist at Cantor Fitzgerald & Co.

"[The rate cut is] sort of in the rear view mirror, barring any spectacularly bad data to come out between now and then," Mr. Cecchini said. "People are now more focused on earnings."

On Wednesday, the industrial sector was one of the biggest drags on the S&P 500. Shares of railroad company CSX fell 9.6% after it cut its annual outlook late Tuesday, citing economic uncertainty and a recent shutdown of a major oil refinery it served. The fall pulled down other railroad companies, sometimes viewed as an economic bellwether, with Norfolk Southern down 6.1% and Union Pacific slipping 5.8%.

"The present economic backdrop is one of the most puzzling I've experienced in my career," CSX Chief Executive Jim Foote said on the company's earnings call Tuesday.

Corporate leaders are "resetting expectations" as they announce financial results, said Lindsey Bell, investment strategist for CFRA.

"You're getting a feel for the real impact of trade and tariffs on earnings and on the outlook," Ms. Bell said.

Bank of America, the second-largest bank by assets, reported solid consumer activity helped boost profit in the latest quarter, but warned that it could take a hit from expected Fed interest-rate cuts. Its shares advanced 2% to $29.57. The bank's profit climbed in consumer banking and wealth management, but was down in the parts of its business that cater to corporate clients. Other lenders, including JPMorgan Chase and Citigroup, posted earnings this week that followed the same pattern.

The slowdown in corporate activity shows how businesses are retrenching as they weigh the fallout of the continuing trade dispute, Ms. Bell said.

"It makes it more difficult for them to invest and take on debt and expand their businesses when there's this big uncertainty about trade in the way," Ms. Bell said. "I think there's just risk to the second half, and the market is starting to realize that."

Netflix, eBay, IBM and Alcoa are due to report later in the day.

Amazon shares were down 0.5% after the European Commission said it would launch an antitrust investigation into its dealings with third-party merchants. The probe is part of a wider push from the European Union against American tech giants such as Facebook and Google-parent Alphabet.

In Europe, the Stoxx Europe 600 fell 0.4% after a mixed session in Asia. Telecommunications equipment maker Ericsson slid 12% on concerns about higher costs that led to a narrower-than-expected operating margin, according to Citigroup analysts.

The yield on 10-year Treasurys fell to fell to 2.062% Wednesday from 2.124% Tuesday, according to Tradeweb. Yields fall when bond prices rise.

U.S. benchmark oil futures fell 1.6% to $56.71 a barrel. Gold was up 1% to $1,424.50 per troy ounce.

Bitcoin fell, trading below $10,000 for a second day as U.S. senators questioned Facebook over its proposed Libra cryptocurrency, highlighting the skepticism that digital-coin systems face from regulators. Bitcoin has lost almost a third of its value, according to research site CoinDesk, after trading above $13,000 a week ago.

Write to Asjylyn Loder at asjylyn.loder@wsj.com and Lauren Almeida at lauren.almeida@wsj.com

(END) Dow Jones Newswires

July 17, 2019 15:20 ET (19:20 GMT)