Stocks dipped on Tuesday as talks to resolve Greece's debt crisis hit a snag and some lackluster earnings put the S&P 500 index's five-day string of gains in jeopardy.
Greece moved closer to the possibility of a chaotic default after euro zone officials rejected a bond swap offer from the country's private bondholders, who pleaded with European officials to reach a deal.
A disorderly default by Greece could revive the possibility of contagion among euro zone nations, putting weaker members of the bloc at higher risk of default.
They don't seem that far apart, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco, referring to the two groups.
At this point, people think they are going to come to some resolution. They have to get the pin back in the hand grenade somehow.
The Dow Jones industrial average <.DJI> dropped 50.06 points, or 0.39 percent, to 12,658.76. The Standard & Poor's 500 Index <.SPX> lost 3.77 points, or 0.29 percent, to 1,312.23. The Nasdaq Composite Index <.IXIC> dipped 1.19 points, or 0.04 percent, to 2,782.98.
Along with developments in Greece, investors grappled with corporate earnings that have failed to reach levels of performance seen in recent quarters. This week is one of the busiest in the quarterly earnings season, with 117 S&P 500 companies due to report.
According to the latest Thomson Reuters data, 20 percent of S&P 500 companies have reported earnings, with 58 percent topping Wall Street expectations, less than usual at this point in the earnings season.
Verizon Communications Inc
Travelers reported a smaller-than-estimated profit as it released less money from its reserves than a year earlier, but it also announced its biggest rate increases in eight years. The stock fell 3.6 percent to $58.10, but analysts had expected the drop and called it a buying opportunity.
Verizon's profit missed estimates by a penny as its wireless business was hit by the high costs of sales of advanced phones, such as the Apple Inc
McDonald's reported stronger-than-expected December sales, but its shares fell on investor concerns its profit may have beat expectations only because of income unrelated to operations.
McDonald's fell 2.2 percent to $98.77, and Verizon shed 1.8 percent to $37.70.
Traders said they were impressed by the market's ability to shrug off bad news. The five-day advance has helped put the benchmark S&P index up more than 4 percent for the year.
Results from other large U.S. corporations, including DuPont
These earnings numbers weren't that great this morning, but the way the market acts right now, you could see it close up on the day, said Massocca.
DuPont shares edged up 0.1 percent to $49.42 after its quarterly revenue rose 14 percent but missed estimates.
Johnson & Johnson
The Federal Open Market Committee began a two-day meeting
on Tuesday, at the end of which policymakers will start a new practice of announcing their interest rate projections. The Fed hopes the projections, to be released
on Wednesday, will give markets and the public greater clarity about its decision-making.
(Reporting By Chuck Mikolajczak; editing by Kenneth Barry)