U.S. stocks closed lower on Tuesday, with lackluster earnings from a few blue chips pressuring the Dow Jones industrial average 1 percent.
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"Basically it's all about two stocks that are weighing on the blue chip index. But they're basically down fractionally. It doesn't really indicate any reversal at this time," said Peter Cardillo, chief market analyst at Rockwell Global Capital. "It's all about earnings and waiting for Apple, which is probably going to be the market leader tomorrow either one way."
The Dow Jones industrial average ended about 180 points lower, or 1 percent, off earlier losses of as much as 232 points. The index fell below 18,000 as IBM and United Technologies plunged about 5.9 percent and 7 percent, respectively.
"We've had better-than-expected earnings so far," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "I'm sure IBM is weighing on the market here ... and obviously that is a big component of the Dow industrials."
He also noted some profit taking as the other two averages traded mildly lower. The Nasdaq Composite closed off 0.2 percent and the S&P 500 ended 0.4 percent lower.
IBM had its worst day since October 20, 2014. The firm reported earnings after the close Monday that missed on revenue, which fell for the 13th consecutive quarter. Both earnings per share and revenue were 13 percent lower than the year-ago period.
United Technologies had its worst day since Sept. 22, 2011, after the firm reported earnings of $1.73 per share for the second quarter, 2 cents above estimates, with revenue shy of forecasts. The industrial conglomerate also cut its full-year forecast, in part to reflect the just-announced sale of its Sikorsky Aircraft unit to Lockheed Martin.
Another blue chip, Verizon, closed 2.35 percent lower as revenue came in below estimates. The telecom firm did post earnings 3 cents above estimates with second-quarter profit of $1.04 per share. Wireless revenue was up 5.3 percent compared to a year earlier, while FiOS revenue increased by 10 percent.
"It would be an overreaction if we had an overvalued stock market and we don't," said Bruce Bittles, chief investment strategist at RW Baird. "An environment like this where price-earnings ratios are rich, price to sales are the highest we've seen ... you've got a market priced to perfection."
Verizon also weighed on the telecommunications sector, closing 1.7 percent lower as the worst performer in the S&P 500.
Several regional banks and major financial institutions hit multi-year highs to push financials to a 7-year high before turning lower.
"It's more range-bound action as the market pauses," said Adam Sarhan, CEO of Sarhan Capital. "As long as new leadership emerges, the bull market is alive and well."
The S&P 500 has held between 2,040 and 2,130 for the last few months.