US stocks fell on Tuesday in the wake of results from IBM and United Technologies that dampened early optimism over earnings season ahead of quarterly profits from tech giants including Apple and Microsoft. The Dow fell 1 percent, with IBM and United Tech contributing around 118 points to the 181-point drop. The decline marked the biggest percentage decline in about two weeks for the blue-chip index.
IBM's shares were down 5.9 percent to $163.07, a day after the company's revenue dropped for the 13th consecutive quarter and fell short of analyst expectations. Fellow Dow component United Technologies tumbled 7 percent to $102.71 and was the worst performer on the Dow after cutting its full-year profit outlook for the third time this year. "For the first time in a while, fundamentals seem to be driving the action today in an otherwise very quiet macro backdrop and probably will continue to do so for the next couple of weeks as we work through the heart of earnings season," said Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago.
After the closing bell, Microsoft lost 3.5 percent to $45.60 and Yahoo shed 1.8 percent to $39 with Apple still expected to report. Strong earnings from technology companies have helped drive gains on the Nasdaq, which has outperformed both the Dow and S&P 500 in July. While markets are near record highs, June-quarter earnings of S&P 500 companies are expected to dip 1.9 percent, according to Thomson Reuters data. That marks an improvement from the expected decline of 3 percent on July 1, but well below the 5.9 percent gain forecast on January 1. So far, 70 percent have reported earnings above analyst expectations, above the 63 percent average beat rate since 1994.
Comments
Comments are closed.