Bank of America Chief Executive Brian Moynihan said second-quarter earnings would be hurt by a drop in trading revenue, lower-than-expected interest rates and the sale or shuttering of certain assets.

"There is a choppy sideways market due to the fact that fundamentals are largely unchanged and expectations of market friendly policies in the U.S. are being pushed to 2018," said Stephen Wood, chief market strategist, North America, Russell Investments.

Seven of the 11 major S&P sectors were lower, with the financial index's 1.3 percent fall leading the decliners.

Financials, which have largely outperformed the broader market on bets of fiscal stimulus and simpler banking regulations under President Trump, are on track to decline 0.7 percent so far this year.

JPMorgan was down 2 percent on Wednesday. Goldman Sachs fell 3 percent and was the biggest drag on the Dow. Bank of America was down 2.2 percent.

At 10:40 a.m. EDT, the Dow Jones Industrial Average was down 46.17 points, or 0.22 percent, at 20,983.3, the S&P 500 was down 5.15 points, or 0.21 percent, at 2,407.76 and the Nasdaq Composite was down 27.40 points, or 0.44 percent, at 6,175.79.

The Federal Reserve issues its Beige Book at 2 p.m. ET (1800 GMT), a compendium of anecdotes on the health of the economy, that will likely provide further evidence that the economy continues to strengthen giving the Federal Reserve impetus to raise rate next month.

Traders currently see an 86.6-percent chance of a quarter-point rate hike at the Fed's June meeting, according to Thomson Reuters data.

Shares of Michael Kors fell 9.4 percent to $32.88 after the luxury fashion retailer gave a bleak full-year forecast and said it would shut more than 100 full-price retail stores in the next two years.

Mallinckrodt was down 1.1 percent at $43.12, after sources said the drugmaker is exploring a sale of its generic drug unit, in a deal that could fetch as much as $2 billion.

Analog Devices rose 3.9 percent to $88.06 after the chipmaker's quarterly results came in above expectations.

Declining issues outnumbered advancers on the NYSE by 1,816 to 928, for a 1.96-to-1 ratio on the downside. On the Nasdaq, 1,842 issues fell and 771 advanced for a 2.39-to-1 ratio favoring decliners.

The S&P 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows. (Reporting by Tanya Agrawal; Additional reporting by Sweta Singh; Editing by Saumyadeb Chakrabarty)