Stocks edged lower on Tuesday, with the S&P 500 pulling back from a five-day rally, as talks to resolve Greece's debt crisis hit a snag and a number of earnings from blue chips disappointed investors.
Greece moved closer to the possibility of a chaotic default. The country's private creditors pleaded with European officials who rejected their bond swap offer to hammer together 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.
The situation in Greece has raised concerns and the market has pulled back, but I don't think it is impacting the market as much (as before) said Doug Cote, the chief market strategist at ING Investment Management.
U.S. equities have recently decoupled from Europe's sovereign debt crisis as signs of progress in the euro zone and improving U.S. data pushed Wall Street higher on improved growth prospects.
The Dow Jones industrial average <.DJI> was down 48.25 points, or 0.38 percent, at 12,660.57. The Standard & Poor's 500 Index <.SPX> was down 3.10 points, or 0.24 percent, at 1,312.90. The Nasdaq Composite Index <.IXIC> was down 0.83 point, or 0.03 percent, at 2,783.34.
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, down from levels seen before 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 3.2 percent to $58.35, 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 2 percent to $37.65.
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 Angela Moon; Editing by Kenneth Barry)