Stocks on Tuesday gave back more than half of Monday’s big gains as a series of soft profit outlooks from major U.S. corporations brought economic worries back into focus for investors.
The Dow Jones industrial average fell 231.77 points, or 2.5 percent, closing at 9033.66. That was only a few points above its low for the day and erased a mid-session rally that saw the Dow pop briefly into positive territory.
The day was another roller-coaster ride for rattled investors. The Dow has risen or fallen by triple digits in 27 of the last 32 trading sessions.
The Dow jumped 413 points Monday on signs that the global credit crunch is easing and on Federal Reserve Chairman Ben Bernanke’s support for a new economic stimulus package from the federal government.
But Tuesday, lower earnings from heavy-equipment manufacturer Caterpillar, a reduced 2008 profit forecast from chemical-maker DuPont and a shortfall in sales at chipmaker Texas Instruments offset better-than-expected results from pharmaceutical giant Pfizer.
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The results reminded investors that the global credit crisis is only part of the reason stock markets worldwide are down 30 percent or more this year. Fears of a possibly deep worldwide recession are also playing a key role.
“Investors are focusing on the weakening economy,” Doug Peta, a market strategist at J&W Seligman & Co. in New York, told Bloomberg News. “The third-quarter earnings season is going to be a rough stretch for the market because just about every company is going to provide fourth-quarter guidance that’s muted at best.”
Broader indexes were down even more than the Dow. The Standard & Poor’s 500 index was off 3.1 percent, at 955.05, and the Nasdaq composite was down 4.1 percent, at 1696.68.