Stocks Fall Sharply As Traders Turn Negative On Earnings News - U.S. Commentary

(RTTNews) - After failing to sustain an initial upward move, stocks moved sharply lower over the course of the trading session on Tuesday. With the pullback on the day, the Dow closed lower for the fifth consecutive session.

The major averages climbed off their worst levels in late-day trading but remained firmly negative. The Dow tumbled 424.56 points or 1.7 percent to 24,024.13, the Nasdaq plunged 121.25 points or 1.7 percent to 7,007.35 and the S&P 500 slumped 35.73 points or 1.3 percent to 2,634.56.

The sell-off on Wall Street came as traders shrugged off an initial positive reaction to earnings news from several big-name companies.

Shares of Caterpillar (CAT) showed a notable downturn after the heavy equipment maker reported better than expected first quarter results but executives said the quarter would be the "high watermark for the year."

Conglomerate 3M Corp. (MMM) also showed a significant move to the downside after reporting first quarter earnings matched estimates but lowering its full-year guidance.

Shares of Google parent Alphabet (GOOGL), Travelers (TRV) and Coca-Cola (KO) also moved lower after the companies reported their quarterly results.

Selling pressure may also have been generated by a continued increase in U.S. treasury yields, with the yield on the benchmark ten-year note climbing above 3 percent for the first time since early 2014.

The increase in treasury yields came following the release of some upbeat economic data, including a report from the Commerce Department showing a bigger than expected increase in new home sales in the month of March.

The report said new home sales soared by 4.0 percent to an annual rate of 694,000 in March after surging up by 3.6 percent to a revised rate of 667,000 in February. Economists had expected new home sales to climb by 1.9 percent.

With the bigger than expected increase, new home sales rose to their highest annual rate since hitting 711,000 last November. New home sales were up by 8.8 percent year-over-year.

A separate report from the Conference Board showed an unexpected improvement in consumer confidence in the month of April.

The Conference Board said its consumer confidence index rose to 128.7 in April from a revised 127.0 in March. Economists had expected the index to dip to 126.1.

Sector News

Chemical stocks moved sharply lower over the course of the trading session, dragging the S&P Chemical Sector Index down by 2.5 percent.

DowDuPont (DWDP), Ingevity (NVGT) and Huntsman (HUN) turned in some of the chemical sector's worst performances on the day.

Significant weakness also emerged among transportation stocks, as reflected by the 2.1 percent slump by the Dow Jones Transportation Average.

Retail, biotechnology, housing, and tobacco stocks also saw considerable weakness, while gold stocks bucked the downtrend amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index jumped by 1.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index edged down by 0.2 percent, the French CAC 40 Index inched up by 0.1 percent and the U.K.'s FTSE 100 Index rose by 0.4 percent.

In the bond market, treasuries climbed off their worst levels of the day but still closed modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 2.983 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Wednesday may be impacted by reaction to earnings news from several big-name companies.

Amgen (AMGN), Capital One (COF), Six Flags (SIX), and Texas Instruments (TXN) are among the companies releasing their quarterly results after the close of today's trading.

Boeing (BA), Comcast (CMCSA), Dr Pepper Snapple (DPS), Northrop Grumman (NOC), and Twitter (TWTR) are also among the companies due to report their results before the start of trading on Wednesday.