U.S. stock indexes head lower
A batch of disappointing company earnings news helped put investors in a selling mood Tuesday, pulling U.S. stocks sharply lower.
Health care companies led the broad market slide, which more than wiped out gains from the day before. Materials, utilities and technology stocks were among the big decliners. Energy stocks also closed lower as crude oil prices declined.
Several companies, including Alcoa, reported quarterly results that fell short of Wall Street’s expectations. While investors will get to size up earnings from many more companies in coming weeks, the downbeat start to the third-quarter earnings season weighed on the market, said JJ Kinahan, chief strategist at TD Ameritrade.
“It’s just a bad tone to get us started,” Kinahan said. “We’ve also been in a really low-volatility environment. This is the first day we’ve seen some heavier trade in a while.”
The Dow Jones industrial average fell 200.38 points, or 1.1 percent, to 18,128.66. Earlier, the average was down as much as 267 points. The Standard & Poor’s 500 index lost 26.93 points, or 1.2 percent, to 2,136.73. The Nasdaq composite index slid 81.89 points, or 1.5 percent, to 5,246.79.
Indexes headed lower from the start of trading Tuesday and never got out of the red. Traders hammered shares in Alcoa and genetics research company Illumina after the companies reported results that fell short of financial analysts’ forecasts.
Alcoa, which is due to split into two companies on Nov. 1, slid $3.60, or 11.4 percent, to $27.91. Illumina sank $45.86, or 24.8 percent, to $138.99.
Fastenal also delivered quarterly results that failed to impress investors. The maker of industrial and construction fasteners fell $2.16, or 5.1 percent, to $39.96.
Traders also sold shares in St. Jude Medical after the medical device maker warned that the lithium battery in some of its implanted heart devices may run out of energy prematurely. The stock lost $2.87, or 3.5 percent, to $78.41. Shares in Abbott Laboratories, which in April agreed to buy St. Jude for $25 billion, also fell. Abbott slid $2.34, or 5.4 percent, to $41.16.
Some companies benefited from others’ bad news.
Apple was got a slight boost after rival Samsung announced it was discontinuing its Galaxy Note 7 phone permanently because of overheating handsets. The Galaxy Note 7 competed with Apple’s iPhone. Apple gained 25 cents to $116.30.
Crude oil prices fell a day after spiking to their highest level in a year, a move that disappointed some investors.
“Many people thought crude would use its momentum to make a run at its recent highs and it completely faded,” Kinahan said.