By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks resumed sharp losses on
Wednesday afternoon as authorities disputed media reports that a
suspect in the Boston marathon bombings had been captured.
Equities had come off session lows after the Federal Reserve's
Beige Book found the U.S. economy to be growing at a "moderate"
pace and some media outlets reported that a suspect in the Boston
marathon bombings was in custody. However, the Boston police
department later said on its Twitter account that no arrest had
been made.
"It appears as though there was a mild positive reaction to the
Beige Book and the possible capture of the suspect in the Boston
tragedy, as both events happened at the same time," said Art Hogan,
market strategist at Lazard Capital Markets.
Stocks started off in a steep decline as an Apple Inc. (AAPL)
supplier gave a weak forecast, Bank of America Corp. (BAC) posted
disappointing results and speculation swirled that Germany could
lose its triple-A rating.
"In this environment you don't want to miss, you want to beat
and guide higher," said Phil Orlando, equity strategist at
Federated Investors, citing Intel Corp. and Bank of America's
quarterly earnings reports.
In addition, unsubstantiated talk involving Germany, the euro
zone's largest economy, hammered German stocks, with the U.S.
market following suit.
"Our desk identified some tweet or something that hit at four
this morning that suggested that Germany's government finances were
under review for a possible downgrade," said Orlando.
"We don't know if this is legitimate, but the bottom line is in
the middle of the night our time European markets went into a
tailspin," he said.
After a 195-point slide, the Dow Jones Industrial Average (DJI)
was lately off 165.42 points at 14,591.36, with B. of A. (BAC)
pacing the index's declines that had all but four of its 30
components in the red.
B. of A. shares slid 5.2% after the lender reported
first-quarter earnings below Wall Street's estimates as its
mortgage business weighed.
Caterpillar Inc. (CAT) was down 1.8% after Macquarie downgraded
the construction-equipment maker to neutral from outperform.
The S&P 500 index (SPX) shed 25.93 points to 1,548.64 with
the technology and energy sectors weighing most heavily.
The technology-heavy Nasdaq Composite (RIXF) declined 69.27
points to 3,195.36. Apple fell as low as $398.11, its first foray
under $400 since September 2011, and more recently was down 6% at
$400.84.
Shares of Apple supplier Cirrus Logic Inc. (CRUS) plummeted
nearly 15% after the chip maker offered a weak first-quarter
revenue outlook and DigiTimes reported that iPad mini shipments
would fall as much as 30% in the second quarter.
Bank of New York Mellon Corp. (BK) declined 2.3% after reporting
a first-quarter loss and adjusted earnings that missed
estimates.
Fairway Group Holdings Corp. (FWM) rallied 33% in its market
debut, after the New York grocer's initial public offering
reportedly got off to a strong start late Tuesday. Shares of rival
Whole Foods Market Inc. (WFM) fell 1.6%.
Textron Inc. (TXT) lost 14% after the firm forecast a drop in
business-jet deliveries and reported a first-quarter profit beneath
estimates.
Yahoo Inc. (YHOO) edged lower after Bank of America Merrill
Lynch upgraded the Internet company to buy from neutral, a day
after Yahoo forecast second-quarter sales below expectations.
For every stock that rose, four fell on the New York Stock
Exchange, where 537 million shares traded as of 2:55 p.m.
Eastern.
Composite volume surpassed 3.1 billion.
On the New York Mercantile Exchange, oil prices (CLK3) fell
under $87 a barrel after government data had production rising and
demand for gasoline down for a second week.
Gold edged lower (GCM3) to end at $1,382.70 an ounce.
On Monday, weak growth numbers from China set off a selloff in
commodities, with benchmark crude for May delivery falling 3% and
gold tallying its largest one-day drop in three decades.
The Financial Times on Wednesday reported a senior auditor in
China had cautioned that escalating local government debt could
bring on a larger financial crisis than the U.S. housing market
crash.
The dollar (DXY) gained against other currencies and Treasury
yields fell, with the benchmark 10-year note (10_YEAR) at
1.69%.
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