NEW YORK – Stocks dropped sharply on Tuesday as a sluggish economy caught up with some of the world's biggest multinationals, hitting their earnings and adding to fears about weak global growth.
The latest string of disappointing results came from blue-chips DuPont and United Technologies, which operate around the world and in many industries. DuPont shares lost more than 8 percent, leading the Dow industrials lower.
"Clearly, U.S. companies are feeling the pain as a result of the global slowdown," said Bernard Baumohl, managing director and chief global economist at the Economic Outlook Group in Princeton, New Jersey.
DuPont pulled the S&P materials sector index down 3.1 percent. DuPont's stock lost 8.5 percent to $45.52 after the chemical company reported lower-than-expected quarterly profit and announced 1,500 job cuts on Tuesday.
With 145 of the S&P 500 companies having reported results so far, 63 percent have missed analysts' top-line expectations for revenue, the inverse of the usual, as 62 percent of companies have traditionally exceeded estimates since 1994, and 55 percent have beaten over the past four quarters, on average.
United Technologies Corp slid 1.4 percent, to $76.72 after its third-quarter earnings fell 3.3 percent. The company, the world's largest maker of elevators and air conditioners, also missed revenue expectations. And 3M Co dropped 3.3 percent to $89.47 after the diversified U.S. manufacturer missed revenue forecasts and cut its profit for 2013.
United Parcel Service Inc reported a lower quarterly profit, citing slowing global trade. Its stock, however, rose 2.9 percent to $73.62 after UPS, the world's largest package delivery company, slightly revised its 2012 forecast - giving Wall Street an indication that it would beat the consensus estimate for the fourth quarter, which includes the crucial holiday season.
Overall earnings for S&P 500 companies are expected to fall 2.5 percent in the third quarter from a year ago, Thomson Reuters data showed.
The Dow Jones industrial average slid 227.36 points, or 1.70 percent, to 13,118.53. The Standard & Poor's 500 Index slipped 19.40 points, or 1.35 percent, to 1,414.42. The Nasdaq Composite Index fell 21.72 points, or 0.72 percent, to 2,995.24.
With the market's recent decline, it has now given up all of its gains since the European Central Bank's Sept 6. announcement of a plan to buy bonds of troubled euro-zone nations.
Moody's downgraded five key Spanish regions by one or two notches late on Monday, citing their limited cash reserves and forthcoming bond repayments.
The S&P 500 was below its 50-day moving average of about 1,434, a level that has acted as a strong support point in recent sessions and could signal further declines if convincingly broken.
The Federal Reserve's policy committee will begin a two-day meeting on interest rates on Tuesday.
A total of 33 S&P 500 companies were scheduled to report earnings on Tuesday, including Netflix and Facebook after the close.
Shares of Harley-Davidson rose 6.5 percent to $46.36 after the U.S. motorcycle manufacturer reported earnings and sales on Tuesday that beat expectations.
Upscale leather-goods maker Coach Inc reported a quarterly profit on Tuesday that topped Wall Street's consensus forecast by a penny per share, along with big sales gains in China and strong quarterly sales growth at its North American stores. Shares of Coach jumped 8.3 percent to $58.67.
(Reporting by Atossa Araxia Abrahamian; Additional reporting by Ryan Vlastelica; Editing by Jan Paschal)