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Dow Logs 4-Day Losing Streak, Alcoa Drops 4%

Tuesday, 10 Jul 2012 | 4:12 PM ET

Stocks finished lower in volatile trading Tuesday, dragged by industrials, after a batch of profit warnings overshadowed earlier optimism that Germany's top court will approve the euro zone's new bailout fund.

“We’re in a sideways market—everyone’s concerned about this earnings season and nothing in Europe’s been solved,” said Joe Saluzzi, co-manager of trading at Themis Trading. “You’re seeing a lot of anxiety and hope for some sort of stimulus program, although the Fed backstop may not work anymore since it’s starting to lose a bit of power.”

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The Dow Jones Industrial Average fell 83.17 points, or 0.65 percent, to close at 12,653.12, finishing lower for the fourth-straight session. Alcoa and Caterpillar led the laggards. The blue-chip index was up 94 points at session highs.

The S&P 500 slumped 10.99 points, or 0.81 percent, to finish at 1,341.47. The Nasdaq dropped 29.44 points, or 1 percent, to end at 2,902.33.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped near 19.

Most key S&P sectors finished lower, led by industrials and materials, while utilities eked out small gains.

Spain was given an extra year to meet a 3 percent budget deficit target. In addition, euro zone finance ministers agreed that its banking sector will be able to access up to 30 billion euros ($36.9 billion) in funding by the end of the month, while the final figure of the bailout , which could yet push the 100 billion euro limit agreed, should be known on or around July 20.

Germany's top court will consider whether Europe's new bailout scheme and budget rules are compatible with national law. German Finance Minister Wolfgang Schaeuble told the court that a big delay could fuel further turbulencein the markets and a loss of confidence in the EU's ability to make decisions.

“We’re waiting for earnings at this point,” said John Fox, co-manager of the FAM Value Fund. “We’ve seen a lot of pre-announcements and profit growth is definitely slowing…it’s a new trend, but it’s not as worrisome.”

Alcoa declined even after the aluminum producer's quarterly revenue and profit edged past Wall Street expectations. Still, aluminum prices have been trading near two-year lows.The company also expects growing demand in the aerospace and auto sectors. Meanwhile, at least two brokerages cut their price target on the Dow component.

Cummins tumbled after the engine maker slashed its full-year sales forecast, hurt by weaker U.S. orders from truck and power generation customers, but the company also raised its dividend. Caterpillar also slumped following the news.

Market's Holding Pattern
What are the markets waiting for? Komal Sri-Kumar, TCW, and Peter Boockvar, Miller Tabak, discuss.

Applied Materials tumbled after the chipmaker said it expects third-quarter earnings to be in the lower half of its previous outlook. The company also cut its fiscal 2012 sales outlook on weaker-than-expected demand.

This comes a day after AMD cut its sales outlook, hurt by disappointing sales in China and Europe. In addition, at least eight brokerages lowered their price target on the company.

Other chipmakers including Micron and Sandisk also declined.

Intel will be acquiring a 15 percent stakein microchip maker ASML for $4 billion and fund the Dutch company's research into next-generation chipmaking technology.

Research In Motion shareholders re-elected the company's board of directors at its annual meeting. The embattled BlackBerry maker is down almost 50 percent year-to-date.

Google is close to paying $22.5 million to settle charges that it bypassed the privacy settings of customers using Apple's Safari browser, according to reports. Meanwhile, BMO raised its price target on the iPad maker to $700 from $695.

Coca-Cola announced a two-for-one stock splitfor the first time in 16 years. The move will increase the number of shares to 11.2 billion for the beverage giant.

Comcast's A&E Television Networks agreed to redeem its 15.8 percent stake in NBC Universal for $3.025 billion. Comcast is the majority owner of NBCUniversal.

United Technologies announced that its Sikorsky Aircraft unit had signed a five-year, $8.5 billion contract to build 653 H-60 Black Hawk and Seahawk helicopters for the U.S. Army and Navy. Meanwhile, Nomura cut its price target on the firm to $95 from $90.

Mako Surgical plunged almost 40 percent after the company posted lower-than-expected sales of its surgical robot for the second quarter in a row and cut its revenue forecast for the full year.

On the economic front, small business optimism dropped sharply in Junefor the second-straight month, according to the National Federation of Independent Business, with businesses downbeat on sales, profits and hiring.

Treasury prices held small lossesafter the government auctioned $32 billion in 3-year notes at a high yield of 0.366 percent and bid-to-cover of 3.52.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

WEDNESDAY: Weekly mortgage apps, international trade, wholesale trade, oil inventories, 10-yr note auction, FOMC minutes; Earnings from Marriott, Chevron interim results
THURSDAY: Jobless claims, import & export prices, Fed Pres Williams speaks, 30-yr bond auction, Treasury budget, Facebook hearing; Earnings from Fastenal
FRIDAY: PPI, consumer sentiment, Fed pres Lockhart speaks, Dell shareholders mtg; Earnings from JPMorgan, Wells Fargo

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