US stocks fall in afternoon trading before quarterly earnings results; tech stocks down most

MarketsAssociated Press

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

KEEPING SCORE: The Dow fell 88 points, or 0.5 percent, to 16,935 as of 2:21 p.m. Eastern time. The Standard & Poor's 500 fell 10 points, or 0.5 percent, to 1,967.

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The tech-heavy Nasdaq composite fell 50 points to 4,401, a loss of 1.1 percent. It hasn't fallen that much in two months. Pandora Media, a music streaming service, fell 6 percent. Two other tech stars, Facebook and Netflix, fell more than 3 percent each.

BUY SAFETY, SELL RISK: Utilities rose 0.7 percent, the only sector of the 10 in the S&P 500 that rose. Telecommunications stocks fell the most, 1.3 percent. The Russell 2000, which tracks small-company stocks, fell 12 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 its 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 so. 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 $1.60, or 2.8 percent, to $55.80 after 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 2.57 percent from 2.61 percent late Monday. In energy markets, U.S. crude for August delivery fell 45 cents to $103.09.