By Victor Reklaitis and Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) -- U.S. stocks deepened their slide
into the red Tuesday amid reports of fighting on the ground in
Ukraine, giving up early gains on upbeat earnings reports from
Coca-Cola Co. and Johnson & Johnson.
Ukrainian forces reportedly stormed an airport in Kramatorsk and
Russian forces have been spotted in the country.
The S&P 500 (SPX) fell 13 points, or 0.7%, to 1,818, with
energy and utilities faring best among the index's 10 sectors. The
benchmark is down 1.6% for the year.
The Dow Jones Industrial Average(DJI) dropped 97 points, or
0.6%, to 16,077. The Nasdaq Composite (RIXF) fared worst among the
main indexes, dropping 74 points, or 1.9%, to 3,948. The Nasdaq is
down 5.5% for the year and 9.4% off its recent high on March 5.
Equities pulled back from session highs after a
lower-than-anticipated reading for a gauge of home-builder
confidence. Also weighing on sentiment was an unexpected decline in
the Empire State manufacturing index.
Jim Kee, president and chief economist at South Texas Money
Management, played down Tuesday's economic data, saying reports
overall support a general view that the U.S. economy will expand by
2.5% to 3% this year.
"The broader data is consistent with the consensus," he told
MarketWatch.
The market's choppy action and slight year-to-date loss isn't
surprising after 2013's big advance, said Kee, whose firm has $2.3
billion in assets under management. He said the firm has been
telling clients to expect one or more pullbacks or corrections this
year, but ultimately a gain by the end of the year.
"It's kind of typical following a year like we had last year,"
he said of the market's slumps in 2014. Kee said the U.S. economy
is normalizing, and he remains bullish. "We've been telling our
clients that a pullback or a correction is a good time to put money
to work," he said.
Among chart watchers, some see further pain in at least the near
term for the S&P 500.
Jonathan Krinsky, chief market technician at MKM Partners, wrote
in a note Tuesday that he expects the benchmark to slip to its
200-day moving average, which is currently around the 1,763 level.
He's "looking for the SPX to test the 200 DMA in the next week or
so," he wrote.
Builder confidence in the market for newly built, single-family
homes edged up slightly in April to a reading of 47 from 46 in
March, but that missed forecasts for 50.
In other U.S. economic news, the New York Federal Reserve said
its Empire State manufacturing index slipped to 1.3 in April from
5.6 in March, missing forecasts for a gain to 8. In addition, the
Labor Department said U.S. consumer prices rose 0.2%, slightly
above what economists expected for that inflation gauge.
On the earnings front, Dow component Coca-Cola Co. (KO) reported
first-quarter revenue that beat forecasts, as well as adjusted
earnings that matched expectations. Shares gained 3.6% to lead the
Dow.
Johnson & Johnson (JNJ) advanced 1.4% after the Dow
component reported quarterly earnings that beat forecasts and
raised its full-year profit guidance. J&J was the second-best
performer in the blue-chip index.
Several Fed speakers were also on the docket. Fed Chairwoman
Janet Yellen said big banks may need more capital, while
Philadelphia Fed President Charles Plosser is moderating a panel
discussion at the Atlanta Fed conference at 3 p.m. Eastern.
Meanwhile, Boston Fed President Eric Rosengren is scheduled to
speak at Husson University in Bangor, Maine, at 4 p.m. Eastern.
Rosengren is a leading dove on the Fed policy committee, but not a
voting member in 2014, and Minneapolis Fed President Narayana
Kocherlakota, a voting member, is speaking at a town hall in Fargo,
N.D., at 8 p.m. Eastern. Read: Spotlight on the economy
After the market's close, Intel Corp. (INTC) is forecast to post
first-quarter earnings of 37 cents a share, and Yahoo Inc. (YHOO)
is likely to report earnings of 37 cents a share in the first
quarter. Intel was last down 0.4%, while Yahoo declined 1.9%. Read
Commentary: Does anyone know what Yahoo wants to be?
"We expect Yahoo to report another muted quarter," analyst
Youssef Squali at Cantor Fitzgerald said in a note. "While 2013
represented a year of right-sizing, investment and acquisition, we
think 2014 should be the year where monetization efforts drive a
resumption in top-line growth, starting with first quarter
2014."
Among other notable movers on Tuesday, Citigroup Inc. (C)
advanced 0.3%, building on a gain from Monday, when the bank
reported first-quarter results above Wall Street forecasts.
Charles Schwab Corp.(SCHW) rose 1% after posting quarterly
profit that topped expectations before the open.
Shares of Motorola Solutions Inc. (MSI) dipped 1.2%, giving up
an earlier gain that came following the company's deal to sell its
enterprise business to Zebra Technologies Corp. (ZBRA) for $3.45
billion in cash.
The iShares Nasdaq Biotech ETF(IBB), which has been a poster
child for the recent tech-led selloff in U.S. stocks, was up last
down 3.1% in recent trade.
On Monday, stocks ended with broad gains, as an unexpectedly
strong rise in March retail sales and consensus-beating results
from Citi lifted the trading mood.
In other financial markets on Tuesday, bourses closed mixed in
Asia, with Hong Kong and Shanghai taking a hit from China's latest
credit data. European stocks lost ground as investors worried about
the Ukraine crisis. Oil (CLK4) and metals(GCM4) declined, pushed
lower by a stronger dollar.
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