Wall Street Falls as Third-Quarter Earnings Season Looms

Dow Jones Newswires

The U.S. stock market edged lower on Tuesday as investors remained reluctant to make big bets ahead of the earnings season.

Cautious mood was prevalent globally as European stocks as well as Treasury yields declined.

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The S&P 500 (SPX) was down 5 points, or 0.3%, at 1,960. The Dow Jones Industrial Average (DJI) dropped 50 points, or 0.3%, to 16,940. The Nasdaq Composite (RIXF) fell 10 points, or 0.3%, to 4,445.

Trading was choppy on Monday, with the S&P 500 (SPX) closing down 0.2% to 1,964.82, and the Russell 2000 (RUT) falling nearly 1%. The S&P 500 dropped below its 50-day moving average last week and has yet to move back above that level. Read: U.S. stocks test key technical levels

Tuesday's light data schedule includes August job openings at 10 a.m. Eastern Time and August consumer credit at 3 p.m. Eastern Time.

Minneapolis Fed President Narayana Kocherlakota, a voting member of the Fed policy committee this year, will give a speech on "clarifying the objectives of monetary policy" in Rapid City, South Dakota, at 2:30 p.m. Eastern. Simon Potter, head of the markets group at the New York Fed, will speak at a conference in New York at 4:30 p.m. Eastern.

Kansas City Fed President Esther George said in a speech in Albuquerque, N.M. on Monday that "the time had come" for Fed officials to start talking seriously about lifting short-term rates, The Wall Street Journal reported.

Braced for earnings: Yum! Brands Inc. (YUM) will report quarterly results after the close Tuesday, but the third-quarter earnings season won't be in full swing until next week. Alcoa Inc. (AA) will report Wednesday.

Burt White, chief investment officer at LPL Financial, and Jeffrey Buchbinder, market strategist at the same company, said in a note Tuesday they expect "another good earnings season" that is likely to boost stocks.

They listed several reasons for optimism in the current reporting season: U.S. economic growth has picked up; upside earnings surprises have been typical since summer 2009; the Institute for Supply Management manufacturing Index, which has a strong track record of predicting earnings growth six months out, has shown solid growth in the past six months; and there have been few signs of cost pressures. Also 'Sell Rosh Hashanah, buy Yom Kippur' worked this year.

Stocks to watch: SodaStream International Inc. (SODA)shares sank 18% in heavy volume ahead of the bell, hit hard as the carbonated-drinks equipment maker warned of a quarterly-sales shortfall.

The Container Store Inc. (TCS) shares fell 14% premarket, extending their slide late Monday after the storage-organization retailer cut its profit and sales view.

The European Commission has opened an investigation into Amazon Inc.'s (AMZN) tax arrangement in Luxembourg. Amazon shares were off 0.8%.

Women's clothing retailer Christopher & Banks Corp. (CBK) forecast quarterly sales below Wall Street's estimate, sending shares down 23%.

Agco Corp. (AGCO) shares stumbled 6.6% as the agricultural-equipment company cut its profit outlook for the year because of weaker-than-expected demand.

Other markets: European markets were lower after another round of downbeat German data. Asian stocks had a mixed session, with the Nikkei 225 index down 0.7%, but Hong Kong's Hang Seng index rose 0.5%. Gold prices (GCZ4) edged just above the key $1,200-an-ounce level. Oil futures (CLX4) slipped, trading below $90 a barrel.