U.S. stocks opened lower on Tuesday as a sharp sell-off in Chinese stock market weighed on Wall Street sentiment.
Chinese shares nosedived on Tuesday with the benchmark Shanghai Composite Index dropping 6.15 percent to close at 3,748.16 points.
The market has showed signs of recovery in the past few days with the Shanghai Index reaching more than 4,000 points before falling back to just above 3,700 Tuesday afternoon.
Despite government's reassurance about continued stabilization of the market, concerns remain that authorities could pull rescue funds.
On the economic front, U.S. housing starts came in much better than expected. Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,206,000, the highest rate since October 2007, said the Commerce Department Tuesday.
This is 0.2 percent above the revised June estimate of 1,204,000 and is 10.1 percent above the July 2014 rate of 1,095,000.
Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,119,000. This is 16.3 percent below the revised June rate, but is 7.5 percent above the July 2014 estimate.
Shortly after the opening bell, the Dow Jones Industrial Average fell 49.60 points, or 0.28 percent, to 17,495.58. The S&P 500 dipped 4.11 points, or 0.20 percent, to 2,098.33. The Nasdaq Composite Index lost 12.96 points, or 0.25 percent, to 5,078.74.
On Monday, U.S. stocks reversed early losses to close higher as investors digested mixed economic reports.