NOK Nokia Corp

By Riva Gold 

Stocks tilted lower Wednesday amid lingering concerns about the strength of corporate earnings, while the British pound began to stabilize following its sharp swings.

Futures pointed to a 0.1% opening loss for the S&P 500, while shares in Europe and Asia were under pressure after a downbeat start to the U.S. earnings season sparked a modest selloff on Wall Street on Tuesday.

Shares of Illumina dropped 25% after the gene-sequencing company cut its revenue guidance while aluminum giant Alcoa fell around 11% after reporting third-quarter earnings, leaving some investors worried about the rest of the earnings season.

In the three quarters where Alcoa fell more than 10% after its report, the S&P 500 traded down 7.5%, 2.6%, and 6.5% for the remainder of those three earnings seasons, according to Bespoke Investment Group.

The Stoxx Europe 600 was little changed by midday as investors weighed a modest bump in the oil and gas sector against losses in technology companies. Brent crude oil was up 0.6% at $52.72 a barrel.

Europe's technology sector was down 2%, leading declines, after Ericsson AB issued a profit warning for the third quarter, a week after it announced plans to slash almost 20% of its domestic workforce. Shares in the Swedish company fell over 17%, while Nordic rival Nokia fell 4.6%.

In currencies, the British pound was last up 0.2% at $1.2277 after four consecutive days of losses. The pound touched a historic low against a basket of currencies on Tuesday, according to Bank of England data released Wednesday morning.

The British currency had fallen sharply late Tuesday, but recovered during Asian trading hours, rising more than 1.5% against the dollar, after media reports suggested that U.K. Prime Minister Theresa May had agreed to hold a parliamentary vote on her plans for taking Britain out of the European Union.

Analysts said that could limit her ability to push for a "hard Brexit," spurring some traders to lift their short positions on the currency.

Still, analysts warned that the news is unlikely to reverse the broader downward trend for sterling.

The pound right now is a barometer of the government's thinking on its exit negotiations, said Russ Mould, investment director at AJ Bell. "It's very difficult to know exactly what will come out of government at the moment," he said.

London's export-heavy FTSE 100 index, which touched its highest level in decades on Tuesday, pulled back 0.3% as the British currency recovered.

In other currencies, the euro fell 0.4% against the dollar to $1.1015, while the dollar rose 0.2% against the yen to Yen103.5820.

The WSJ Dollar index, which measures the dollar against a basket of 16 currencies, was little changed after its biggest daily gain since August. Expectations have grown recently for the U.S. Federal Reserve to raise interest rates at its meeting in December, supporting the dollar.

Fed-fund futures, used by investors to bet on central bank policy, currently imply a nearly 70% chance of a rate rise by December, according to CME Group.

"We're a market that is run by central banks right now," said Bret Chesney, portfolio manager at Alpine Global, noting that comments from Fed officials have driven most recent moves in the stock market.

Minutes from the Fed's September meeting are due later Wednesday. Policy makers voted to leave rates unchanged but three officials dissented in favor of an increase, so investors will watch closely for further insight into the debate.

In bonds, the yield on the U.S. 10-year Treasury note was up slightly at 1.780% from 1.760% on Tuesday. The gap in yield between the two-year Treasury note, last at 0.883%, and the two-year German note, last at minus 0.665% is around its highest in a decade, according to Brown Brothers Harriman.

Earlier, shares in Asia mostly followed Wall Street lower as expectations rose of U.S. rate increase in December. Japan's Nikkei Stock Average fell 1.1% while the Hang Seng Index fell 0.6%.

Hiroyuki Kachi and

Matthias Verbergt

contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

October 12, 2016 07:38 ET (11:38 GMT)

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