Stocks open lower, extend losses to second day
Investors dumped stocks for a second break from a huge four-week rally as the market girded itself for potentially grim earnings reports.
Major stock indexes fell more than 2%, including the Dow Jones industrial average, which lost 186 points. But low trading volume in a holiday-shortened week could have amplified the decline.
The markets will be closed for Good Friday.
All 10 broad industry groups fell Tuesday. 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 were naturally cautious before the parade of quarterly results. The low expectations could benefit stocks, he said.
“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 especially focused on bank earnings, which are due to start coming out next week with reports from Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co.
Several pessimistic forecasts about potential loan losses have jolted the market in recent days.
“The real key is going to be bank earnings,” said Joe Veranth, chief investment officer at Dana Investment Advisors in Brookfield, Wis. “Really the entire market hinges on that.”
On Tuesday, the Dow slumped 186.29 points, or 2.3%, to 7,789.56. The blue chips had been down nearly 214 points at their low of the day. The Standard & Poor’s 500 index dropped 19.93 points, or 2.4%, to 815.55, while the Nasdaq composite index tumbled 45.10 points, or 2.8%, to 1,561.61.
The Russell 2,000 index of smaller companies fell 3.5%.
More than three stocks declined for every one that rose on the New York Stock Exchange.
In a widely anticipated report, aluminum giant Alcoa, the first of the Dow components to post first-quarter results, said after the closing bell that it lost $497 million as prices fell for the lightweight metal.
The company’s loss was worse than some analysts had forecast but not as bad as some had feared. Some investors have worried that Alcoa’s results would set the tone for dismal results to come.
Financial stocks fell for a second day, with an index of 24 banks dropping 3.5% after losing 3.8% on Monday. JPMorgan Chase fell 3.4%, while Wells Fargo dropped 2.6% and Bank of America slipped 1.6%.
In other market highlights:
* International Speedway tumbled 24% after the motor-sports company reduced its full-year forecast because of the weak economy.
* Brinker International gained 3.7% after the operator of the Chili’s restaurant chain said its quarterly results would top Wall Street’s estimates.
* Gold prices rebounded after three days of declines, rising $10.70 to $882.20 an ounce. The dollar was mixed against other major currencies.
* Oil prices fell. Crude futures slumped $1.90 to $49.15 a barrel on the New York Mercantile Exchange.
* Overseas, key stock indexes fell 1.6% in Britain, 0.6% in Germany, 0.9% in France and 0.3% in Japan.
