The US stocks dropped sharply on Tuesday as shares of Caterpillar and Microsoft tumbled after the quarterly results were out, while an unexpected fall in the orders of durable goods weighed on sentiment.
After the Dow component reported results, tech giant Microsoft dropped 10 percent to USD 42.27 for the day. The major engine of its historic earnings power, selling Office and Windows to big businesses, has been showing signs of fading.
The shares of Caterpillar, a mining and construction equipment making company, declined 7.5 percent to USD 79.52 after its net profit came in below the expectations of the market.
Several multinational firms have posted discouraging turnouts and forecasts, with the stronger dollar turning out to be a common culprit.
Adding to the concerns on the front of earnings, a gauge of American business investment plans dropped in an unexpected way in the month of December, signaling that the slowing growth globally and declining prices of crude oil were beginning to have an impact on the economy.
The US consumer confidence posted its highest reading since August 2007.
Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin, said, “US equities could come under pressure as investors ratchet down their growth estimates for the US economy. There was just too much hype about the US economy having risen into a new and higher growth channel. We’re still stumbling along.”
At 10:19 am EST (1519 GMT), the S&P 500 fell 27.05 points or 1.31 percent to 2,030.04, while the Dow Jones industrial average dropped 294.37 points or 1.67 percent to 17,384.33. On the other hand, the Nasdaq Composite declined 81.82 points or 1.71 percent to 4,689.94.
1,770 issues dropped on the Nasdaq, while 684 advanced for a 2.59-to-1 ratio supporting decliners. On the New York Stock Exchange (NYSE), the dropping issues outnumbered advancing ones by 2,059 to 848 for a 2.43-to-1 ratio.
The S&P 500 recorded 29 new 52-week highs as well as 10 new lows; while the Nasdaq Composite posted 24 new highs and 30 new lows.