Stocks fall for a second day; Nasdaq slumps

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Associated Press

Posted on July 8, 2014 at 2:34 PM

Updated Tuesday, Jul 8 at 2:36 PM

NEW YORK (AP) — U.S. stocks declined in afternoon trading Tuesday as investors waited for corporate earnings reports due out this week. Technology and small companies fell sharply.

KEEPING SCORE: The Dow Jones industrial average fell 113 points, or 0.7 percent, to 16,910 as of 3:10 p.m. Eastern time. The Standard & Poor's 500 dropped 14 points, or 0.7 percent, to 1,963. The tech-heavy Nasdaq composite fell 64 points, or 1.4 percent, to 4,387. It hasn't fallen that much in two months. Pandora Media, a music streaming service, slumped 7 percent Tech stars Facebook and Netflix dropped 4 percent.

17K STUMBLE: The Dow dropped below 17,000 from the open after crossing that threshold last week on news that employers have been hiring more.

THE QUOTE: Investors are getting nervous that the global economy is slowing, says Steven Ricchiutto, senior economist at Mizuho Securities. Germany reported Tuesday that exports fell more than expected in May. The United Kingdom reported manufacturing output dropped 1.3 percent that month.

"The global economy is taking a hit today," Ricchiutto said. "Global growth is decelerating. It may actually be stalling."

BUY SAFETY, SELL RISK: Utilities rose 0.9 percent, the only sector of the 10 in the S&P 500 that rose. Telecommunications stocks fell the most, 1.5 percent. The Russell 2000, which tracks small-company stocks that tend to be riskier investments, fell 13 points, or 1 percent, to 1,174.

WATCH THOSE EARNINGS: With major stock indexes near record highs, investors will be scrutinizing second-quarter earnings reports for evidence the run-ups have been justified.

Financial analysts expect earnings per share for the S&P 500 rose 6.6 percent from a year earlier, according to S&P Capital IQ, a research firm. That is about double the increase in the first quarter. They expect earnings growth to accelerate for the rest of the year, topping 11 percent in the fourth quarter.

The earnings reporting season unofficially kicks off after the close of U.S. stock markets Tuesday when aluminum producer Alcoa reports results. Wells Fargo, the No. 1 home mortgage lender in the U.S., reports Friday.

BULL MARKET PETERING OUT? Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, doesn't think the bull market is over. But he's not surprised investors are jittery and selling a bit. He notes that the S&P 500 has risen for 1,940 days since its 2009 low, the fourth longest bull market since World War II.

"The longer it gets out of line with historical patterns," he says, "the closer we get to fizzling out."

DEAL SWEETENER: Drugmaker AbbVie fell $1.68, or 2.9 percent, to $55.72 following news that it raised its offer to buy another drug company, Shire. The target, known for its rare-disease drugs, has rejected three AbbVie offers.

EUROPE: France's CAC-40 fell 1.4 percent and Germany's DAX fell 1.3 percent. Britain's FTSE 100 dropped 1.2 percent.

BONDS AND OIL: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.56 percent from 2.61 percent late Monday. In energy markets, U.S. crude for August delivery fell 24 cents to $103.29.

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