US stocks opened lower with the Dow Jones Industrial Average falling by triple digits weighed down by weak earnings by IBM and United technologies.
The S&P 500 index most recently fell 7 points or 0.3% at 2,121.44 points with seven of its ten key sectors ending lower.
The Nasdaq Composite reversed earlier gains to most recently trade 17 points or 0.3% lower at 5201.70 points.
The Dow Jones Industrial Average fell more than 180 points or 1% to trade at 17,913.31 points.
“We remain cautious regarding earnings because there is a lack of revenue growth,” John Toohey, head of equities at USAA Investments in San Antonio, Texas, told Reuters.
“For the bull market to be sustainable, we need to transition from financial engineering to organic revenue growth.”
Disappointing second quarter results from both Dow Components sent their stocks tumbling weighing on the blue chip index. IBM is the second highest weighted component of the blue chip index while United Technologies is tenth.
IBM’s shares tumbled by as much as 5.5% to most recently trade at $163.69 a share after reporting a decline in revenue for the thirteenth straight quarter.
Its profit was also weighed down by acquisition related charges falling 16.6% on a year on year basis to $3.5 billion dragging the Dow Jones by more than 62 points.
United Technologies fell more than 7.7% $107.8 a share after reporting that sales fell by more than 5% I the quarter ending June. The multinational conglomerate also lowered its earnings guidance for the rest of the year.
Most traders were however waiting for quarterly results from Microsoft and Apple and other big name companies expected to report their second quarter earnings today.
“In a world of lackluster growth, growth stocks are really attractive,” Jack Ablin, chief investment officer at BMO Private Bank, told the Wall Street Journal.
“If investors can latch their wagon onto a company that’s growing consistently at 10-15%, they’re going to pay a huge premium for that, because there aren’t that many places in the world growing at that rate.”
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