Dow Falls 118.79 Points, Weighed Down by IBM, Chevron -- WSJ

By Riva Gold and Aaron Kuriloff Features Dow Jones Newswires

Falling energy shares and mixed corporate earnings pressured U.S. stocks on Wednesday.

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Some investors and analysts are hoping earnings growth will support what they say are elevated stock prices, after signs of economic expansion and expectations for corporate-friendly policies from the Trump administration helped drive major indexes to records.

Cooling economic data and concerns about the administration's ability to enact tax cuts and regulatory rollbacks have weighed on major U.S. indexes in recent weeks, along with worries about rising geopolitical tensions.

The Dow industrials lost 118.79 points, or 0.6%, to 20404.49 on Wednesday. The S&P 500 slipped 4.02 points, or 0.2%, to 2338.17, and the Nasdaq Composite gained 13.56 points, or 0.2%, to 5863.03.

Investors' allocation to U.S. stocks fell to its lowest levels since January 2008, according to an April survey of global fund managers by Bank of America Merrill Lynch, with 83% of investors, the highest ever, saying U.S. stocks are overvalued. Allocation to eurozone equities climbed to a 15-month high in April amid decreasing fears about the impact of European elections.

"Investors are expecting another strong earnings season," said Nandini Ramakrishnan, strategist at J.P. Morgan Asset Management. "It would be disappointing if earnings-per-share numbers didn't come out [well]...given the exuberance of markets in the past five or six months."

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International Business Machines shaved 57 points off the Dow industrials, falling $8.36, or 4.9%, to $161.69, after the technology giant on Tuesday reported that revenue fell from the year-earlier period for the 20th consecutive quarter. It was the stock's biggest one-day percentage decline since June.

Morgan Stanley climbed 83 cents, or 2%, to 42.04, after the bank said its quarterly earnings rose 70%. A day earlier, Goldman Sachs Group missed analysts' estimates after a decline in trading revenue. Its shares fell 1.50, or 0.7%, to 214.09 on Wednesday.

Yahoo shares were choppy during the session and closed down 56 cents, or 1.2%, at 47, after the company Tuesday released results above expectations and reaffirmed it expects to close its deal with Verizon by the end of June.

Declines in energy stocks also dragged on the Dow industrials, with Chevron falling 1.45, or 1.4%, to 104.23, and Exxon Mobil losing 56 cents, or 0.7%, to 80.49.

The price of U.S. crude oil slid 3.8% to $50.44 a barrel -- its largest decline in more than a month -- after the U.S. Energy Information Administration said weekly gasoline supplies rose for the first time since February. Energy shares were among the biggest decliners in the S&P 500, losing 1.4%.

Assets that investors consider relatively safe retreated after strengthening on Tuesday. Gold for April delivery fell 0.8% to $1,281.40 a troy ounce after climbing for five straight sessions, while the yield on the 10-year Treasury note rose to 2.202% from 2.177% in the previous session. Yields rise as prices fall.

The WSJ Dollar Index rose 0.4%, a day after its biggest daily drop in a month.

The Stoxx Europe 600 inched up 0.2%, recovering from its worst session since September. Bank shares led gains as data Wednesday showed the eurozone's trade balance returned to surplus in February, adding to hopes for a modest pickup in growth in the first quarter.

The Nikkei Stock Average edged up less than 0.1% Wednesday. The Shanghai Composite Index fell 0.8% to its lowest since February, while Hong Kong's Hang Seng Index shed 0.4%. Australia's S&P/ASX 200 fell 0.6%.

Write to Riva Gold at riva.gold@wsj.com and Aaron Kuriloff at aaron.kuriloff@wsj.com

(END) Dow Jones Newswires

April 20, 2017 02:47 ET (06:47 GMT)