Wall St lower after subpar start to earnings season

on January 12 2010 11:24 AM

U.S. stocks fell on Tuesday, dragged lower by Alcoa Inc's worse-than-expected results and a warning from Chevron Corp that its fourth-quarter earnings will drop.

The Nasdaq fared worse than the Dow and S&P 500 after Electronic Arts Inc cut its fiscal 2010 forecast, citing weak holiday sales in Europe. The video game publisher lost 7.1 percent to $16.97.

Alcoa kicked off the earnings season late Monday with an adjusted profit that was lower than expectations while oil company Chevron said its fourth-quarter results would be sharply lower than the previous quarter.

Both companies weighed on the Dow, with Alcoa dropping 8.5 percent to $15.98 and Chevron falling 1.1 percent to $79.99.

A lot of people will be reassessing the risk they have in their portfolios with regards to earnings, said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

The Dow Jones industrial average <.DJI> slipped 23.96 points, or 0.22 percent, to 10,640.03. The Standard & Poor's 500 Index <.SPX> lost 5.96 points, or 0.52 percent, to 1,141.02. The Nasdaq Composite Index <.IXIC> gave up 14.29 points, or 0.62 percent, at 2,298.12.

The early losses put the S&P 500 on track to break a six-day winning streak. A rise on Tuesday would have matched a 1987 seven-day string of gains to start a new year. Both the Dow industrials and the S&P hit 15-month highs on Monday.

Shares in KB Home , one of the five largest U.S. home builders, fell 4.5 percent to $15.64 after it reported a profit, but orders for its new line of smaller, cheaper homes came in lower than expected. The Dow Jones home construction index <.DJUSHB> fell 1.1 percent.

Procter & Gamble Co limited the Dow's losses after Bank of America-Merrill Lynch upgraded the stock to buy from neutral. Its shares rose 1.3 percent to $60.98.

MGM Mirage rose 8.7 percent to $11.85 after Goldman Sachs upgraded the casino operator to buy from neutral.

(Editing by Padraic Cassidy)

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