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U.S. stocks slide for a second day as earnings loom

NEW YORK - Investors unloaded all manner of stocks Tuesday as they wait for corporate earnings reports to help them determine whether a recent run-up in the market is justified. Internet companies bore the brunt of the selling.

It was the second day of broad declines following record closes for major U.S. indexes last week. The Dow Jones industrial average fell below 17,000, a level it topped Thursday for the first time in its 118-year history. The technology-weighted Nasdaq composite fell 1.4 percent, its biggest drop in two months.

Among the biggest losers were Twitter (TWTR) and Pandora Media (P), a music streaming service, down 7 percent each. Facebook (FB) and Netflix (NFLX) each dropped more than 3 percent.

Investors also dumped small-company stocks, which tend to be riskier investments. The Russell 2000 fell 1.2 percent.

The winners of the day were utilities, considered a safe choice in uncertain times and attractive because of their fat dividends. That sector rose 0.6 percent, the only one of the 10 in the Standard and Poor's 500 index that finished higher.

Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, says the selling this week is not surprising given the S&P 500's near tripling in price since the current bull market began in 2009, and also given the fact that it has lasted more than five years, making it the fourth longest since World War II.

"The longer it gets out of line with historical patterns," he says, "the closer we get to fizzling out."

As companies begin reporting second-quarter earnings this week, investors will be looking for signs that the strengthening U.S. economy has translated into a surge in profits. Expectations are for a 6.6 percent gain over the year earlier, double the increase in the first quarter, according to S&P Capital IQ, a research firm.

On Tuesday, the Dow index fell 117.59 points, or 0.7 percent, to close at 16,906.62. The Nasdaq fell 60.07 points to end at 4,391.46. The S&P 500 lost 13.94 points, or 0.7 percent, finishing at 1,963.71.

Among S&P 500 sectors, telecommunications companies fell the most, 1.5 percent.

Steven Ricchiutto, senior economist at Mizuho Securities, thinks signs that the global economy is slowing have added to investor jitters. On Tuesday, Germany reported that exports fell more than expected in May and the U.K. said manufacturing output dropped 1.3 percent that month.

"The global economy is taking a hit today," Ricchiutto says. "Global growth is decelerating. It may actually be stalling."

Germany's DAX stock index fell 1.3 percent on Tuesday, and Britain's FTSE 100 dropped 1.2 percent.

The U.S. earnings reporting season got started after the closing bell Tuesday when aluminum maker Alcoa (AA) reported results that were better than investors were expecting. Wells Fargo (WFC), the No. 1 home mortgage lender in the U.S., reports on Friday.

Companies were hit hard in the first quarter by cold winter weather. But financial analysts expect earnings growth to accelerate for the rest of the year, topping 11 percent in the fourth quarter.

Among stocks making big moves Tuesday, drugmaker AbbVie (ABBV) fell $1.71, or 3 percent, to $55.69 following news that it raised its offer to buy another drug company, Shire (SHPG). The target, known for its rare-disease drugs, has rejected three AbbVie offers.

U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.56 percent from 2.61 percent late Monday.