NEW YORK - Warnings of weaker profits helped pull the stock market down Tuesday despite some positive economic news.
Major indexes headed lower from the opening bell Tuesday, bottomed out around 11 a.m. then slowly recovered some of their losses. At one point, the Dow Jones industrial average was down as much as 138 points.
The Dow ended the day down 93.39 points, or 0.6 percent, to close at 15,518.74.
The S&P 500 index lost 9.77 points, or 0.6 percent, to 1,697.37. All 10 sectors in the S&P 500 fell.
The Nasdaq composite dropped 27.18 points, or 0.7 percent, to 3,665.77.
Three stocks fell for every one that rose on the New York Stock Exchange. Consolidated volume was below average at 3.1 billion shares.
American Eagle share fell 12 percent after the retailer slashed its earnings forecast in half late Monday, blaming weak sales. The company said cutting prices on clothing to lure shoppers was hitting its profit margins. The shares fell $2.40 to $17.57.
Two of American Eagle’s rivals also slumped. Abercrombie & Fitch shares fell $2.09, or 4 percent, to $49.57. Urban Outfitters lost $1.20, or 3 percent, to $42.47.
Most companies have reported better results during he second-quarter earnings season, but sales have slowed. A growing list of companies, including eBay and Marriott, have told analysts to lower their expectations for the coming quarters. The overall picture has left investors with little reason to cheer.
“Earnings have been moving up, just not spectacularly,” said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors. “We’d be much happier to see better revenue growth than what we’ve seen.”
Analysts expect companies in the Standard & Poor’s 500 index to post earnings growth of 4.4 percent in the second quarter. But revenue is on track to shrink 0.6 percent.
The stock market remains near record highs. The S&P 500 index closed above 1,700 points for the first time last week and rose five of the past six weeks. The S&P, a benchmark for most equity mutual funds, is up 19 percent this year, already ahead of its 13 percent gain in 2012.
Speculation that the Federal Reserve could start easing off its support for the economy helped knock commodity prices down Tuesday. Charles Evans, who votes on the Fed’s policy as president of the Federal Reserve Bank of Chicago, said the Fed could start scaling back its bond buying later this year.
Gold fell $19.90, or 2 percent, to $1,282.50 an ounce, while silver sank 19.7 cents, or 1 percent, to $19.523 an ounce.
Traders often buy gold in the belief that the Fed’s efforts will weaken the dollar and spur inflation, driving prices for gold and other precious metals higher. Hints from Fed officials that the bank may change course this year have battered commodity prices.
The yield on the 10-year Treasury note was unchanged from late Monday at 2.64 percent.
Shares of CVS Caremark sank $1.73, or 3 percent, to $59.89 after the drugstore operator lowered its earnings target for the year.
Molson Coors Brewing shares rose $3.18, or 6 percent, to $53.26 after the company reported better earnings and revenue than analysts had expected, helped by sales in central Europe.
Business, Pages 26 on 08/07/2013