Closing Bell: Downbeat Earnings End 8-Day Rally for S&P 500

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A string of lackluster earnings reports from companies including Coca-Cola and retail brokerage Charles Schwab pushed stocks lower Tuesday, as investors awaited comments from Federal Reserve Chairman Ben Bernanke on Wednesday.

The Dow Jones industrial average (^DJI) subtracted 32 points, or 0.2 percent to close at 15,452, while the S&P 500 (^GPSC) surrendered 6.25 points, or 0.4 percent, to 1,676, ending its eight-day string of records. The Nasdaq (^IXIC) dropped 9 points, or 0.25 percent, to 3,599.

Shares of Coca-Cola (KO) dropped 81 cents, or 2 percent, to $40.21 after the company reported that its second-quarter profit fell 4 percent to $2.68 billion, or 50 cents a share, from $2.79 billion, or 61 cents a share, a year earlier. Weaker demand for soft drinks pushed revenues down 3 percent to $12.75 billion. Charles Schwab (SCHW) fell 72 cents, or 3.3 percent, to $21 after its earnings came in short of analyst expectations as expenses rose and its interest margins fell.

A key measure of homebuilder sentiment rose to its highest level in more than seven years this month. The National Association of Home Builders/Wells Fargo builder sentiment index climbed to 57 in July from 51 in June -- the third straight monthly gain.

In other economic news, consumer prices surged in June, largely on big increases in gasoline costs. The Labor Department said its consumer price index rose 0.5 percent, the largest increase since February. But underlying inflation pressure remained benign against the backdrop of lukewarm domestic demand.

Stocks got a boost last week when Fed Chairman Ben Bernanke said the central bank would not ease its stimulus before the economy was ready. Investors will be listening to comments from Bernanke again this week for more clues about the central bank's outlook for the economy. The Fed chairman will give his semi-annual testimony to Congress on Wednesday.

Among other stocks in the news:
  • Cintas Corp. (CTAS), a supplier of uniforms, fell 73 cents, or 1.5 percent, to $47.15. The company said late Monday that its fiscal fourth-quarter net income rose 9 percent, but it gave a tepid outlook for the current year due in part to the health care overhaul law.
  • Heidrick & Struggles International (HSII) dropped $3.07, or 17 percent, to $14.79 after the executive search firm said it is no longer pursuing a sale of its business and that its CEO is stepping down.
  • Goldman Sachs (GS) dropped $2.74, or 1.7 percent, to $160.26 as investors focused on the outlook for the bank's regulatory environment, even after the bank said its profit doubled in the second quarter.
  • Ford Motor (F) fell 53 cents, or 3 percent, to $16.60 after Goldman Sachs removed the carmaker from its "conviction buy list" because of a lack of catalysts to push the company's stock higher in the near future. Ford has gained 27 percent this year.
  • Marathon Petroleum (MPC), a fuel refiner, fell nearly 4.4 percent to $69.92 after the company forecast weak earnings and said its business was being hurt by renewable fuels laws.
  • Apple (AAPL) reportedly is in early negotiations to buy Israel-based PrimeSense, a developer of chips that enable 3-D machine vision, for $280 million, according to Israel's Calcalist website. The Hebrew-language news source says a delegation of Apple engineering executives visited PrimeSense in early July. Apple added $2.83, or 0.66 percent, to $430.27 in Tuesday trading.
What to watch Wednesday:
  • The Commerce Department releases housing starts for June at 8:30 a.m. Eastern Time.
  • The Federal Reserve releases its latest Beige Book survey of economic conditions at 2 p.m.
The following companies issue quarterly financial results:
  • American Express Co. (AXP)
  • Bank of America Corp. (BAC)
  • EBay Inc. (EBAY)
  • Intel Corp. (INTC)
  • IBM (IBM)
  • Mattel Inc. (MAT)
-Compiled from staff and wire reports.

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Closing Bell: Downbeat Earnings End 8-Day Rally for S&P 500
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