After ending the previous session slightly higher, stocks moved back to the downside during trading on Tuesday. The Dow showed a particularly steep drop amid a negative reaction to earnings news from some blue chip companies.
The major averages ended the day in negative territory but well off their lows for the session. The Dow slumped 181.12 points or 1 percent to 17,919.29, while the Nasdaq dipped 10.74 points or 0.2 percent to 5,208.12 and the S&P 500 fell 9.07 points or 0.4 percent to 2,119.21.
The sharp pullback by the Dow partly reflected substantial losses by United Technologies (UTX) and IBM (IBM), which both came under pressure after reporting their second quarter results.
United Technologies plunged by 7 percent after reporting quarterly revenues that missed estimates and cutting its full-year guidance, while IBM plummeted by 5.9 percent after reporting quarterly sales that fell more than expected.
Telecom giant Verizon (VZ) also showed a notable move to the downside after reporting better than expected second quarter earnings but on revenues that came in below estimates.
Meanwhile, shares of Sanmina (SANM) moved sharply higher on the day after the electronics manufacturer reported better than expected third quarter results and provided upbeat guidance for the full year.
Motorcycle maker Harley-Davidson (HOG) also turned in a strong performance after reporting second quarter earnings that beat expectations.
Nonetheless, overall trading activity remained relatively subdued amid another quiet day on the U.S. economic front.
The economic calendar will pick up somewhat in the coming days with the release of reports on weekly jobless claims and new and existing home sales.
Sector News
Partly reflecting the steep loss posted by IBM, the NYSE Computer Hardware Index tumbled by 2.3 percent to a nine-month closing low. Printer maker Lexmark (LXK) also fell sharply after providing disappointing guidance.
Significant weakness was also visible among telecom stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Telecom Index. Frontier Communications (FTR) and CenturyLink (CTL) posted notable losses.
Utilities and biotechnology stocks also came under pressure on the day, with Exact Sciences (EXAS) leading the biotech sector lower after pricing a public offering of 7 million shares of its common stock at $25.50 per share.
On the other hand, gold stocks regained some ground after falling sharply in recent sessions. The NYSE Arca Gold Bugs Index surged up by 2.7 percent, bouncing off its worst closing level in over twelve years.
The rebound by gold stocks came even though the price of the precious metal extended its recent sell-off, with gold for August delivery siding $3.30 to a new five-year closing low of $1,103.50 an ounce.
Trucking and airline stocks also saw some strength on the day, helping to limit the downside for the broader markets.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index climbed by 0.5 percent.
Meanwhile, the major European markets moved to the downside on the day. While the German DAX Index tumbled by 1.1 percent, the French CAC 40 Index slid by 0.7 percent and the U.K.'s FTSE 100 Index dropped by 0.3 percent.
In the bond market, treasuries moved higher over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 2.34 percent.
Looking Ahead
Earnings news is likely to remain in focus on Wednesday, with Apple (AAPL), Microsoft (MSFT), and Yahoo! (YHOO) releasing their quarterly results after the close of today's trading.
Boeing (BA) and Coca-Cola (KO) are also among the companies due to report their results before the start of trading on Wednesday.
Following the lack of major U.S. economic data released over the past two days, trading on Wednesday could be also impacted by a report on existing home sales.
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