A spate of bad profit reports took down the markets, breaking a rally that had pushed stocks higher for seven of the last nine days.
But U.S. markets could not maintain their up ways in the face of such bad news from industry stalwarts like AT&T, Texas Instruments and McDonald’s.
The Dow Jones industrial average fell 88.08 to 8,450.16. The technology-packed Nasdaq composite index declined 16.87 to 1,292.80. The S&P 500 index subtracted 9.56 to 890.16.
“The market is rewarding companies that say nice things, and punishing those that fall short,” said Bob Howard, publisher of Positive Patterns, an investment newsletter. “Get used to it.”
Wall Street pros say the markets will continue to react to profit reports and little else throughout the rest of the earnings reporting season, which will last for another two weeks.
“Earnings news is keeping the market underwater,” said Bernie Schaeffer, chairman of Schaeffer’s Investment Research.
Here’s why Wall Street is bearish on the next few weeks: With more than half of the S&P 500 member companies having already reported third-quarter results, profits are up 11 percent. However, analysts are expecting earnings growth of only 6.5 percent by the time all the members have reported. That means the companies that are reporting late are likely to disappoint.