U.S. stocks slumped Tuesday after some of the market’s largest companies reported disappointing earnings, taking investors on a turbulent ride that deepened the losses for the year.
The companies that rattled the market included Microsoft, Caterpillar and Procter & Gamble. Some also forecast weaker results in months ahead.
An unexpected drop in U.S. orders of long-lasting goods also weighed on the market, briefly dragging the Dow Jones industrial average down 390 points early in the day before it pared back some of the losses. It was the biggest one-day decline for the blue-chip index since Jan. 5.
The downbeat company report cards raise concerns about Corporate America’s ability to grow profits at a time when many investors are expecting the resurgent U.S. economy to drive earnings should economic growth weaken overseas.
“That theme, ‘Boy, this is the year earnings are going to come back,’ suffered a little bit of a setback,” said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute. “Investors are starting to worry that the stronger dollar and some of the impacts of energy aren’t always positive.”
The Dow dropped 291.49 points, or 1.7 percent, to close at 17,387.21. It is now 3.7 percent below its record high of 18,053.71 on Dec. 26.
The Standard & Poor’s 500 index lost 27.54 points, or 1.3 percent, to 2,029.55. It’s down 2.9 percent from its high of 2,090.57 on Dec. 29.
The Nasdaq composite dropped 90.26 points, or 1.9 percent, to 4,681.50.
Nine of the 10 sectors in the S&P 500 fell, with technology stocks dropping the most.
Traders remain focused on corporate earnings, which are a key driver of stocks. But there were few bright spots Tuesday.
Caterpillar, Packaging Corp. of America, J&J Snack Foods and mining company Freeport-McMoRan reported earnings that fell short of Wall Street forecasts.
