Market report

Earnings, global strife sink stocks

The downing of a passenger plane flying over Ukraine rattled U.S. financial markets Thursday, deepening a slide set off by a batch of disappointing earnings reports and a weak home-construction report.

All three major stock indexes ended lower for the first time in a week, but remained near highs and positive for the year.

The Standard & Poor's 500 index fell 23.45 points, or 1.2 percent, to 1,958.12. The Dow slid 161.39 points, or 0.9 percent, to 16,976.81. The Nasdaq composite sank 62.52 points, or 1.4 percent, to 4,363.45.

Ukrainian officials said a Malaysia Airlines passenger plane carrying 295 people was shot down over war-torn eastern Ukraine, although both the government and pro-Russia separatists fighting in the region denied responsibility. The situation raised concerns of wider geopolitical instability and an escalation of tensions between Russia and the West.

Investors responded by seeking refuge in U.S. government bonds. The yield on the 10-year Treasury note fell to its lowest level since May. Gold and oil prices rose.

SanDisk, AutoNation, Yum Brands and Mattel were among the biggest decliners after reporting earnings or profit forecasts that disappointed investors. Airline and homebuilder stocks also fell sharply.

"What happened with the plane today and things swirling around with what may have actually happened with the plane caused a bit of a sell-off," said JJ Kinahan, chief strategist at TD Ameritrade. "The geopolitical risk is always the first one that people look for, because it's the one that changes the fastest. The market always hates uncertainty."

Earlier Thursday, stock futures were down before the market opened as investors pored over the latest earnings and other news.

A pair of government reports pointed to an uneven U.S. recovery. The number of people seeking unemployment benefits fell last week, but home construction fell in June to the slowest pace in nine months, clouding the outlook for the housing recovery.

Homebuilders slumped on the news. M/I Homes led the decline, tumbling $1.38, or 5.8 percent, to $22.37.

"The housing starts numbers were weak, but housing has been incredibly volatile," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research. "They were definitely disappointing."

The yield on the 10-year Treasury note fell to 2.46 percent from 2.53 percent late Wednesday. Benchmark U.S. crude oil for August delivery jumped $1.99 to $103.19 in New York. Gold surged $17.10 to $1,316.90 an ounce.

All 10 sectors in the S&P 500 declined, led by energy stocks.

Even with growing geopolitical uncertainty, the market has remained focused on company earnings, which have been mostly favorable so far.

AutoNation's second-quarter earnings rose 12 percent, but fell short of Wall Street's expectations. The stock of the nation's largest auto dealership chain fell $5.01, or 8 percent, to $55.82.

Yum Brands shares slid $5.70, or 7 percent, to $77.01 after the operator of Taco Bell, Pizza Hut and KFC reported higher second-quarter earnings but also sluggish sales in the U.S. at Pizza Hut and KFC chains.

Business on 07/18/2014

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