The Dow Jones Industrial Average tumbled more than 180 points as the blue-chip index was dragged lower by declines in the shares of IBM and United Technologies Corp.
The Standard & Poor’s 500 index lost nine points, or 0.4 percent, to close at 2,119.
The Nasdaq composite shed 10.74 points, or 0.2 percent, to 5,208.12. “Some days we’ll be up because of good earnings and some we’ll be down because of bad earnings”. Now that Greece has secured a new bailout from its creditors, and China’s stock-market tumble appears to have abated, attention has turned to corporate earnings.
“The market is being cautious, waiting for a little more direction”, said Ian Kerrigan, global investment specialist at J.P. Morgan Private Bank. The Nasdaq composite index closed Monday at its third consecutive all-time high.
On the other hand, Michael Antonelli, a managing director and institutional equity sales trader at Robert W. Baird & Co. noted that a “couple of fairly large names were weak and depressing” the sentiment today. Lexmark also announced it will cut around 500 jobs over the next 18 months as part of restructuring efforts.
The Dow Jones industrial average dropped 1 percent to 17,919.29.
The Chicago Board Options Exchange Volatility Index sank 0.2 percent Tuesday to 12.22 after Friday reaching its lowest level since December.
The earnings season is picking up pace, with about a quarter of S&P 500 companies releasing results this week. Its revenue was $20.8 billion, slightly lower than the $20.9 billion expected by analysts. More than 130 companies in the S&P 500 will report this week, including Apple (AAPL) and GoPro (GPRO) after the bell Tuesday.
The Nasdaq is up 472.07 points, or 10 per cent. Even, IBM and United Technologies were among the companies which failed to keep up with the market expectations in the last quarter and post a grimmer outlook than expected. Analysts forecast that second-quarter earnings by companies in the S&P 500 will shrink 3.3 percent compared with the prior year, according to S&P Capital IQ. Still, Toshiba shares ended up 6 percent, recovering recent losses, as investors took the resignations as a sign the company might use the opportunity to clean up its act. Revenue was flat.
Tesla Motors fell 5.5 percent after UBS downgraded the stock, predicting vehicle volume growth would disappoint and warning of higher costs and increased competition from other auto companies. The shares slid 5.5 percent to $US266.77 at the close in New York, the steepest one-day drop since January 14.
Harley-Davidson jumped 4 percent after its earnings beat estimates.
However, only 53 per cent have topped revenue forecasts, below the 61 per cent average beat rate since 2002. Since the economy has recovered, there just isn’t as much call for the metal.