Stocks finished Tuesday's session with wide losses, as negative layoffs data, mixed corporate earnings news, and increasing bond yields dampened investors' spirits.
The blue-chip Dow Jones industrial average fell 149.72 points, or 1.63%, to 9,036.32. The broader Standard & Poor's 500 index lost 17.35 points, or 1.77%, to 965.47. The tech-heavy Nasdaq composite index was down 40.5 points, or 2.36%, to 1,673.56.
The S&P 500 index closed at its lowest level since May 30, and all three major indexes finished the session below their 50-day moving averages.
Investors received an upbeat read on the service sector Tuesday morning. The July non-manufacturing ISM index rose to 65.1, from 60.6 in June. The July reading is a record high.
However, the improvements in the economy have not bolstered the labor market. Executive placement firm Challenger, Gray, and Christmas, reported 85,100 planned job cuts in July. In June, the figure had dipped to a 31-month low of 59,700. Following Friday's weaker than expected employment report, the data leave many traders uncertain about the economic outlook, according to S&P MarketScope.
After the closing bell, technology bellwether Cisco Systems (CSCO) met Wall Street's earnings per share expectations for the fourth quarter. Shares in Cisco dropped in after hours trading on news that fourth quarter revenues declined. Investors awaited Cisco's conference call with analysts Tuesday afternoon for more details about the company's outlook.
Before the opening bell, consumer products maker Gillette (G) announced higher quarterly profits. The company's earnings-per-share beat Wall Street's expectations. Shares in Gillette were slightly lower Tuesday.
Insurer MetLife (MET) also advanced, picking up more than 2%. The company reported better-than-expected earnings after Monday's close.
Discount retailer Costco (COST) saw its shares sink 18% Tuesday after the company warned of a weaker-than-expected fourth quarter.
Hong Kong-based clothier Tommy Hilfiger (TOM) swung to a first quarter profit, from a loss one year ago, but gave a cautious outlook for the rest of the fiscal year. Shares in Tommy shot up 8%.
Cable operator Cablevision (CVC) posted a second quarter profit vs. a loss last year. The company said it discovered additional accounting irregularities at its American Movie Classics broadcasting unit. Shares fell almost 7%.
In other corporate news, General Electric (GE) agreed to acquire most of Transamerica Finance Corp., a U.S. unit of European insurer Aegon, for $5.4 billion.
Telephone company Verizon (VZ) continued to hold talks with labor unions, three days after a contract deadline passed. Verizon workers have held strikes twice in the past three years.
More earnings news is expected Wednesday. Energy companies Calpine (CPN), Devon Energy (DVN), and Keyspan (KSE) are set to report, as well as insurers Aon (AOC) and Hartford Financial Group (HIG).
Prices of U.S. Treasuries finished well lower Tuesday, weighed down by increased supply and a record-high ISM services report. The benchmark 10-year note's yield was 4.41%.
On Tuesday, the U.S. Treasury auctioned $24 billion of 3-year notes and $17 billion in 4-week bills -- part of an expected $110 billion in notes and bills offered this week. The 3-year auction "was very weak, indeed a disaster, as suggested by the price action heading into the bid deadline," notes economic research firm MMS International. "The notes were awarded at a sloppy 2.422%, which was well above expectations."
With no significant economic data expected to be released on Wednesday, traders will focus on the U.S. Treasury's $18 billion 5-year auction.
European markets finished higher Tuesday. In London, the Financial Times-Stock Exchange 100 gained 20.9 points, or 0.51%, to 4,121. The U.K. economy expanded 0.4% in the second quarter, and industrial production rose 0.7%. In Germany, the DAX Index rose 33.05 points, or 0.97%, to 3,438.36. In France, the CAC 40 was up 45.61 points, or 1.45%, to 3,187.61.
In Asia, major stock indexes ended lower. Japan's Nikkei index finished down 70.21 points, or 0.74%, to 9,382.58, in a low-volume trading session. Auto maker Toyota revised its second-half profit outlook upwards. Meanwhile, Hong Kong's Hang Seng index fell 5.76 points, or 0.06%, to 10,177.38.