Dow Posts Steep Loss In Reaction To Blue Chip Earnings

(RTTNews) - 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 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.

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.

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.