By Wallace Witkowski, MarketWatch –
SAN FRANCISCO — U.S. stocks had their worst day of the year Tuesday on anxiety leading up to earnings season and as government bond yields for Spain and Italy surged.
The Dow Jones Industrial Average closed down 213.66 points, or 1.7 percent to 12,715.93, after touching an intraday low of 12,710.56. The day’s loss resulted in a five-session losing streak, the longest such streak since August. It was the largest one-day point and percentage decline for the index since Nov. 23.
Caterpillar Inc. and Bank of America Corp. were the biggest decliners in the Dow, dropping 3 percent and 4.4 percent, respectively. Hewlett-Packard Co. was the only gainer in the blue-chip index, up 0.6 percent.
Composite volume for NYSE-listed stocks topped 4.6 billion shares, compared with an average daily volume of 3.8 billion for the year. Composite volume for Nasdaq-listed shares exceeded 1.9 billion shares, compared with an average daily volume of 1.76 billion for the year.
Stocks on Wall Street accelerated their losses after equity markets in Europe closed with steep declines. Italy’s FTSE MIB stock index sank 5 percent and Spain’s IBEX 35 dropped 3 percent.
A selloff in Spanish and Italian debt spilled into the new week, lifting yields for 10-year Spanish and Italian bonds.
Low expectations heading into earnings season are pressuring U.S. markets, said Sam Turner, director of large-cap portfolio management at Riverfront Investment Group. Overall, earnings are expected to contract by 0.1 percent this season, breaking a nine-quarter winning streak.
“There’s some anxiety around the commentary that’s going to come out of this season and the sustainability of margins across the board,” he said.
Turner, however, said expectations may have fallen too low and that investors might go into earnings season and be surprised by improved margins in such areas as the tech sector.
The Nasdaq Composite closed down 55.86 points, or 1.8 percent, at 2,991.22, its first close below 3,000 since March 12, and its largest point and percentage decline for the year.
Investors are taking a pause before earnings season considering the market rally since October, said Dan Greenhaus, chief global strategist at BTIG. Their focus has shifted from the big-picture economic data to the smaller-picture data of individual company earnings, he said. “Since macroeconomic data is waning, taking some money off the table is hardly a dumb idea,” Greenhaus said.
The S&P 500 fell 23.61 points, or 1.7 percent, to close at 1,358.59, for a five-day losing streak, its longest since November. It was the largest one-day point and percentage decline for the index since Dec. 8.
After the market close, Dow component and aluminum producer Alcoa Inc. posted a profit of 9 cents a share, compared to an expected loss of 3 cents a share. Shares of Alcoa, which closed down 2.9 percent, rose 5.2 percent in after-hours activity.
Electronics retailer Best Buy Co. dropped 5.9 percent after the company said Brian Dunn resigned as chief executive officer and director.
Shares of Supervalu Inc. rallied more than 15 percent after the supermarket operator’s profit forecast for the current year cheered investors.
Leading up to Tuesday, stocks on Monday had suffered their worst drop in a month as investors reacted to a substantial shortfall in March jobs growth.
European markets, which were closed Monday for the extended Easter holiday, dropped as investors got their first opportunity to react to the U.S. jobs data. The Stoxx Europe 600 index fell 2.5 percent.
Also, China reported a trade surplus for March. But imports grew less than expected, feeding concerns of a domestic slowdown.
