NEW YORK — Investors dumped stocks for a second day Tuesday, prolonging a break from a huge four-week rally as the market girds itself for potentially grim earnings reports.
Major market barometers all fell more than 2 percent, including the Dow Jones industrial average, which lost 186 points. Trading volume was low, which can amplify swings in the market.
The selling hit numerous industries, including financials and energy, in an otherwise quiet day during a holiday-shortened week. The markets will be closed for Good Friday.
Analysts attributed the pullback to profit-taking after a huge advance in March that gave the Dow its best four-week performance in more than 75 years.
Dan Cook, senior market analyst at IG Markets in Chicago, said investors are naturally cautious ahead of the parade of companies’ quarterly results but added that the low expectations could benefit stocks. “We’ve already set the bar very low for these companies, so it is going to be hard for them to disappoint to the downside,” he said.
Investors are also focused on bank earnings that get underway after the long weekend, and several pessimistic forecasts about potential loan losses have jolted the market in recent days.
Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. all report next week.
“The real key is going to be bank earnings,” said Joe Veranth, chief investment officer at Dana Investment Advisors in Brookfield, Wis. “The entire market hinges on that.”
On Tuesday, the Dow dropped 186.29, or 2.3 percent, to 7,789.56. The Standard & Poor’s 500 index fell 19.93, or 2.4 percent, to 815.55, while the Nasdaq composite index fell 45.10, or 2.8 percent, to 1,561.61.
Traders had been nervous ahead of a report from Alcoa Inc., the first of the 30 companies that make up the Dow to post quarterly results. The giant aluminum maker reported after the closing bell that it lost $497 million in its first quarter as prices fell for the lightweight metal. The company’s loss was worse than some analysts had forecast but still not as bad as some traders had feared.
