Stocks Fall Sharply Following Disappointing Results From Alcoa - U.S. Commentary

(RTTNews) - Stocks moved sharply lower over the course of the trading session on Tuesday, more than offsetting the strength seen in the previous session.

The major averages climbed off their worst levels of the day going into the close but remained firmly negative. The Dow tumbled 200.38 points or 1.1 percent to 18,128.66, the Nasdaq plunged 81.89 points or 1.5 percent to 5,246.79 and the S&P 500 slumped 26.93 points or 1.2 percent to 2,136.73.

The sell-off on Wall Street partly reflected a negative reaction to earnings news from Alcoa (AA), with the aluminum giant slumping by 11.4 percent.

The steep drop by shares of Alcoa came after the company reported third quarter earnings and revenues that came in below analyst estimates.

The release of quarterly results from Alcoa is seen as the unofficial start of earnings season, with financial giants Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) due to report their results later this week.

A pullback by the price of crude oil along with an increase in the value of the U.S. dollar also weighed on the markets.

Crude oil for November delivery slid $0.56 to $50.79 a barrel after ending Monday's session up $1.54 at $51.35 a barrel, the highest closing level since July of 2015.

Light trading activity may have exaggerated the downward move by the markets amid another quiet day in terms of major U.S. economic news.

Sector News

Biotechnology stocks moved sharply lower over the course of the trading session, resulting in a 3.7 percent drop by the NYSE Arca Biotechnology Index. The index fell to its lowest closing level in well over two months.

Illumina (ILMN) led the biotech sector lower, plunging by 24.8 percent after cutting its third quarter revenue guidance.

Considerable weakness was also visible among electronic storage stocks, as reflected by the 3.6 percent loss posted by the NYSE Arca Disk Drive Index. Seagate Technology (STX) fell sharply despite providing upbeat guidance.

Semiconductor stocks also came under pressure on the day, dragging the Philadelphia Semiconductor Index down by 2.1 percent. The index pulled back further off the sixteen-year closing high it set last Thursday

Health care, gold, networking, and steel stocks also saw significant weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1 percent, while Hong Kong's Hang Seng Index tumbled by 1.3 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slid by 0.6 percent, the U.K.'s FTSE 100 Index and the German DAX Index both fell by 0.4 percent.

In the bond market, treasuries moved moderately lower, resuming their recent downward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to a four-month closing high of 1.759 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the minutes of the latest Federal Reserve meeting, which may shed some additional light on the outlook for monetary policy.