The Dow Jones Industrial Average shed 17.24 points (0.16 percent) to 10,433.71, moving down from its highest close since October 2008.

The tech-heavy Nasdaq dipped 6.83 points (0.31 percent) to 2,169.18 and the broad-market Standard & Poor's 500 index lost a fractional 0.59 points (0.05 percent) to 1,105.65.

Stocks declined from the opening bell as the market digested fresh government data showing gross domestic product (GDP) in the July-September period expanded 2.8 percent, down from the initial estimate of 3.5 percent.

But shares regained part of the losses after the Federal Reserve raised its outlook for U.S. economic growth in 2010 to a range of 2.5 to 3.5 percent, and said the troubles in unemployment appeared to be near a peak.

Although the United States economy expanded for the first time in the third quarter after a year of contraction, analysts said the government's revised figure exposed weakeness in the world's largest economy.

"The disappointment in the revision is that it shows the U.S. economy, while growing, is still growing below its potential, which is not a positive consideration as far as prospective job growth is concerned," said Briefing.com's analyst Patrick O'Hare.

Analysts at Charles Schwab & Co cited personal consumption in the data, which was smaller than initially reported and "short of expectations.

They also said that inflation readings came in below forecasts which might have dampened some hopes that the Federal Reserve was close to beginning to tighten its monetary policy to stave off an overheating of the economy.

Separately, the Conference Board, a key research firm, said that U.S. consumer confidence rose slightly in November after two months of declines but remained mired in the doldrums.

It suggests that "consumers are not convinced the recession is over," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com.

"Of most concern was that the continued deterioration in assessments of current labor market conditions fell to new cyclical lows," he said.

The unemployment rate hit a 26-year high of 10.2 percent in October, with a net loss of 190,000 jobs.

U.S. computer giant Hewlett-Packard lost 1.63 percent to US$50.19 after its net profit declined to US$7.7 billion in the quarter to October from US$8.3 billion a year ago.

Citigroup shed 1.64 percent to US$4.21 after reaching an agreement to sell its Diners Club North America card business to BMO Financial Group (BMO).

U.S. Airways rose 6.45 percent to US$3.30 as it delayed the delivery of 54 Airbus aircraft as part of spending cuts aimed at returning the struggling airline to profitability.

The bond market was up. The yield on the 10-year U.S. Treasury bond retreated to 3.317 percent from 3.364 percent Monday and that on the 30-year bond fell to 4.257 percent from 4.287 percent.