Market Wrap: Stocks Fall on China Woes, Weak Profit Fears

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By Caroline Valetkevitch

NEW YORK -- U.S. stocks fell Tuesday, with the Dow snapping a seven-day winning streak, on renewed fears of slowing growth in China and another bout of selling in biotech shares.

Biotechs led the S&P 500 and Nasdaq lower and the S&P health care index, down 1.2 percent, had the biggest losses among S&P sectors, followed by industrials, down 1.2 percent. The Nasdaq biotech index was down 3.2 percent, extending recent declines.

%VIRTUAL-pullquote-There's a little nervousness about earnings reports that we'll be seeing over the next couple or three weeks.%Worries about third-quarter earnings reports continued to weigh on sentiment. S&P 500 companies are expected to report a nearly 5 percent fall in profit, the biggest decline in six years, according to Thomson Reuters data.

"There's a little nervousness about earnings reports that we'll be seeing over the next couple or three weeks," said John Carey, portfolio manager at Pioneer Investment Management in Boston.

"The international situation continues to weigh on people's minds, and commodities were weaker earlier. In the absence of any strong new economic data or blow-away type earnings results, people are still cautious, waiting for the Fed to decide on whether it's going to raise rates or not," he said.

After the bell on Tuesday, shares of Intel (INTC) were nearly flat in choppy trade following results, while shares of JPMorgan Chase (JPM), which also reported results, were down 1.7 percent.

Earlier in the day, data showed Chinese imports fell 20 percent in September due to weak domestic demand, indicating growth in the world's second-largest economy was sputtering.

The Dow Jones industrial average (^DJI) fell 49.97 points, or 0.3 percent, to 17,081.89, the Standard & Poor's 500 index (^GSPC) lost 13.77 points, or 0.7 percent, to 2,003.69 and the Nasdaq composite (^IXIC) dropped 42.03 points, or 0.9 percent, to 4,796.61.

A devaluation of the yuan currency in late August triggered a steep sell-off in global equities. A bounce back in commodities has helped stocks recover in recent sessions, as well as investors' bets that the Federal Reserve will keep rates near zero until next year.

On tap this week are results from the big banks and other earnings bellwethers, including Goldman Sachs (GS), Bank of America (BAC) and General Electric (GE).

Shares of Ryder System (R) were down 9.3 percent at $68.63 -- the biggest percentage decliner in the S&P 500 -- while FMC Corp. (FMC) was down 3.1 percent at $36.35, both following disappointing forecasts late Monday.

About 6.1 billion shares changed hands on U.S. exchanges, below the 7.5 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

What to watch Wednesday:
  • At 8:30 a.m., the Labor Department reports producer prices for September, and the Commerce Department reports retail sales for September.
  • The Commerce Department reports business inventories at 10 a.m.
  • The Federal Reserve releases its survey of regional economic conditions for end of summer and early fall at 2 p.m.
Earnings Season
These selected companies are scheduled to release quarterly financial results:
  • Bank of America (BAC)
  • BlackRock (BLK)
  • Delta Air Lines (DAL)
  • Netflix (NFLX)
  • PNC Financial Services (PNC)
  • Wells Fargo (WFC)
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