U.S. stocks closed lower Wednesday as investors digested earnings reports and weighed weaker-than-expected data. (Tweet This)
"The market came into the week pretty overbought and with these earnings reports, (there's) a little bit of a headwind," said Bruce Bittles, chief investment strategist at RW Baird.
The Dow Jones industrial average closed down 157 points after falling as much as 194 points, pressured by declines in Wal-Mart and Boeing. The index ended below the psychologically key level of 17,000 for the first time since Oct. 7.
Wal-Mart plunged 10 percent, its worst day in two decades, as the greatest weight on the Dow. The firm said Wednesday morning that it expects sales to be flat in fiscal year 2016.
"It's all Wal-Mart. I think it's rare to see a stock like Wal-Mart down 10 percent," said Ryan Larson, head of equity trading, U.S., at RBC Global Asset Management (U.S.). "Wal-Mart's what brought sentiment down this morning on (their comments about) future growth and earnings and what they see for 2016."
Other retail stocks declined in sympathy. The SPDR S&P Retail ETF (XRT) closed down nearly 1 percent for a fourth-straight day of losses.
Boeing closed down 4.3 percent, contributing nearly as much to declines in the Dow as Wal-Mart. The aircraft maker's stock fell amid concerns about aircraft demand following Delta comments in its earnings call Wednesday about a "huge bubble in excess wide-body airplanes," StreetAccount said.
The Dow transports closed mildly higher, with Ryder leading advancers and CSX the greatest decliner.
The Nasdaq composite closed lower, failing to hold an intraday attempt to rally. SanDisk jumped 11 percent on news it was exploring a potential sale boosted semiconductor stocks. The Market Vectors Semiconductor ETF (SMH) closed up 3 percent. Intel also gained, closing up nearly 2.4 percent, following earnings that beat on both the top and bottom line.
The S&P 500 closed lower, ending below the psychologically key level of 2,000 for the first time since Oct. 7. Materials and energy were the only advancers, while consumer sectors were the greatest laggards.
"This has been a rally where the stocks that were beaten down most in the May-August period ... are leading the way," said Marc Chaikin, CEO of Chaikin Analytics.
"If you can revive the dead that's good for the market," he said.
U.S. retail sales barely rose in September as cheaper gasoline weighed on service station receipts, while producer prices posted their biggest decline in 8 months.
"The economic data (was) a bit disappointing and plays in to the Fed staying on hold, probably for the balance of the year," said Peter Cardillo, chief market economist at Rockwell Global Capital.
"I think what we're seeing now is a rush into gold," he said.
Gold futures settled up $14.40 at $1,179.80 an ounce.
In other economic news, August business inventories remained unchanged, slightly missing expectations for a 0.1 percent increase.
"Inventory growth has slowed to zero for two months straight as of August, a come down from the second-quarter juiced GDP number," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
In the afternoon, the U.S. Federal Reserve's latest Beige Book said . The report said the stronger dollar was more of a headwind to the manufacturing sector than slowdown in China.
"I think the Beige Book probably just added to a weak tape in a low volume environment," Larson said.
"In addition to commodity weakness you also have the 10-year under 2 (percent)," he said. "Under 2, it does tend to lend to a little more pessimism. "
Treasury yields declined, with the 10-year yield at 1.98 percent, falling below 2 percent for the first time since Oct. 5. The fell to 0.55 percent.
The U.S. dollar traded nearly 1 percent lower against major world currencies, with the euro higher above $1.14 and the yen at 118.77 yen against the dollar.
Crude pared losses to settle down 2 cents, at $46.64 a barrel.
Stocks traded mixed in the open, with the S&P near the flatline and the Nasdaq composite higher, while the Dow was negative.
"The market was very overbought and we're due to pull back," said Adam Sarhan, CEO of Sarhan Capital. "Earnings expectations have been ratcheted down so many times that the barriers (shouldn't be) very hard for them to beat."
Wells Fargo also reported earnings that beat expectations.
"The market's looking for any positives to come out of these earnings," said JJ Kinahan, chief strategist at TD Ameritrade.
"We have Netflix later," he said. "That one is going to be sort of interesting later. Can they continue their great growth and give us a bit of insight into what is going on worldwide?"
The video-streaming giant is scheduled to release results after the close. Citigroup and Goldman Sachs earnings are slated for Thursday before the bell.
Overseas, equities were lower after weaker-than-expected Chinese inflation data added to concerns about the health of the world's second-biggest economy.
China's consumer price index (CPI) rose 1.6 percent in September from a year earlier, against forecasts of a 1.8 percent rise from a Reuters poll and following August's 2 percent gain.
Chinese stocks slid into negative territory in the afternoon trading session, with the Shanghai Composite down nearly 1 percent. Major indices in Europe closed lower, with the DAX off more than 1 percent.
The Dow Jones Industrial Average closed down 157.14 points, or 0.92 percent, at 16,924.75, with Wal-Mart and Boeing the greatest decliners and Intel leading gainers.
The S&P 500 closed down 9.45 points, or 0.47 percent, at 1,994.24, with consumer staples leading eight sectors lower and energy and materials the only advancers.
The Nasdaq closed down 13.76 points, or 0.29 percent, at 4,782.85.
The CBOE Volatility index (VIX), widely considered as the best gauge for volatility, held near 18.
About three stocks declined for every two advancers on the New York Stock Exchange, with an exchange volume of 886 million and a composite volume of 3.6 billion in the close.
On tap this week:
Earnings: Citigroup, Goldman Sachs, UnitedHealth, US Bancorp, Schlumberger, Mattel, Advanced Micro Devices, Philip Morris, BB&T, Blackstone, Charles Schwab, WD-40
8:30 am: Consumer price index
8:30 am: Jobless claims
8:30 am: Empire State manufacturing survey
10:00 am: Philadelphia Fed business outlook survey
10:30 am: Natural gas inventories
10:30 am: New York Fed President William Dudley speaks
11:00 am: Oil inventories
Earnings: GE, Honeywell, Comerica, Kansas City Southern, SunTrust
9:15 am: Industrial production
10:00 am: JOLTS
10:00 am: Consumer sentiment
10:00 am: Atlanta Fed business inflation expectations
1:00 pm: Oil rig count
4:00 pm: Treasury International Capital
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