NEW YORK – Investors sent stocks lower Tuesday, extending a pause in a big four-week rally as the market girds itself for potentially grim earnings reports.
The Dow Jones industrial average dropped about 150 points while the broader indexes fell more than 1.5 percent.
The selling blanketed a broad swath of sectors, from financials to energy, amid a fairly quiet day of trading during a holiday-shortened week. The markets are closed Friday in observance of Good Friday.
Analysts attributed the pullback to profit-taking after a huge advance in March that gave the Dow Jones industrials their best four-week performance in more than 75 years.
Investors are keenly focused on bank earnings that get under way next week, and several pessimistic forecasts about potential loan losses have jolted the market in recent days.
“The real key is going to be bank earnings,” said Joe Veranth, chief investment officer at Dana Investment Advisors in Brookfield, Wis. “Really the entire market hinges on that.”
Earnings season gets under way later Tuesday with a report from Alcoa Inc., the first Dow component to post quarterly results. The giant aluminum maker is expected to report a loss after the market closes, setting the tone for potentially more dismal results to come.
In early afternoon trading, the Dow Jones industrial average dropped 156.03, or 2.0 percent, to 7,819.82. The Standard & Poor’s 500 index fell 13.30, or 1.6 percent, to 822.18, while the Nasdaq composite index fell 28.63, or 1.8 percent, to 1,578.08.
Financial stocks helped push the market to its first loss in five days on Monday after the Treasury Department delayed a program designed to help banks unload soured loans from their books and a prominent analyst said losses at banks are likely to exceed Depression-era levels.
Though investors have been more optimistic in recent weeks, buoyed by increasingly positive news about the economy, many analysts have warned that the rally might not be sustainable if earnings reports come in worse than expected.
“I don’t think anybody is making a bet on improvement yet,” said Jon Biele, head of capital markets at Cowen & Co. “There is still a very much wait-and-see attitude that is weighing heavily on the market.”
JPMorgan Chase & Co. shares fell 45 cents to $27.75, while Wells Fargo & Co. slipped 8 cents to $15.17. Bucking the trend, Bank of America Corp. added 2 cents to $7.50, and Citigroup Inc. rose 8 cents to $2.80.
Alcoa shares fell 14 cents to $7.77, weighing on other material companies.
In corporate news, General Motors Corp. and Segway Inc. announced a partnership Tuesday to develop a two-wheeled, two-seat electric vehicle designed to be a clean alternative to traditional cars and trucks in big cities. The announcement came at a perilous time for GM, which is in the midst of a vast restructuring that could lead to bankruptcy. Shares dropped 32 cents, or 14 percent, to $1.95.
Bond prices rose, pushing the yield on the 10-year note to 2.89 percent from 2.93 percent late Monday.
In other trading, the Russell 2000 index of smaller companies fell 7.53, or 1.7 percent, to 440.03.
Declining issues outnumbered advancers by about three to one on the New York Stock Exchange where volume came to a light 537.9 million shares.
The dollar was mixed against other major currencies. Gold prices rose.
Light, sweet crude fell $1.26 to $49.79 a barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average fell 0.3 percent and Hong Kong’s Hang Seng index fell 0.5 percent. Britain’s FTSE 100 was down 1.6 percent, Germany’s DAX index was down 0.6 percent, and France’s CAC-40 was down 0.9 percent.
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