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New York - US stocks fell on Tuesday after disappointing sales from Coca-Cola and as investor caution took hold on the day before the Federal Reserve chairperson's congressional testimony.
The market's pullback came a day after both the Dow and the S&P 500 ended at record closing highs for the third consecutive session.
Tuesday's decline put the S&P 500 on track to break an eight-day string of gains. Nine of the 10 S&P 500 industry sector indexes fell, with energy and material shares ranking among the day's worst performers. Marathon Petroleum dropped 4.1% to $70.13. Alcoa slid 1% to $8.09.
Coca-Cola was among the biggest drags on the Dow and weighed on the S&P 500 after the world's largest soft drinks maker reported weaker-than-expected second-quarter sales, which it blamed on economic malaise and unusually cold and wet weather. The stock fell 2.2% to $40.11.
"I think you're going to see a lot of companies that are coming in just barely meeting their earnings expectations and again reporting reduced revenues, and I think that's the crux of the problem with our economy," said Brian Amidei, managing director at HighTower Advisors in Palm Desert, California.
Financial stocks, which started the day as outperformers, also dropped despite strong earnings from Goldman Sachs. The S&P financial sector index fell 0.5%.
Goldman Sachs reported quarterly profit doubled as the bank made more money trading bonds before an interest-rate spike hit markets in June. But Goldman's stock slid 1.7% to $160.28 as investors fretted that the results could not be easily repeated.
The Dow Jones industrial average was down 42.07 points at 15 442.19. The Standard & Poor's 500 Index was down 7.90 points at 1 674.60. The Nasdaq Composite Index was down 13.83 points at 3 593.67.
Trading was expected to remain subdued ahead of Federal Reserve chairperson Ben Bernanke's testimony on Wednesday before the House Financial Services Committee. His comments will be closely analysed for signs of when the central bank may start reducing its stimulus efforts.
Johnson & Johnson shares dipped 0.1% to $90.31 after the Dow component reported higher-than-expected second-quarter earnings. Strong sales of prescription drugs and medical devices more than offset anemic growth of its consumer products, Johnson & Johnson said. Earlier, the stock hit a 52-week high at $91.65.
Analysts expect S&P 500 companies' second-quarter earnings to have grown 3% from a year earlier, with revenue up 1.5%, data from Thomson Reuters showed.
US homebuilder confidence rose in July to its strongest level in 7-1/2 years as tightening supply and solid demand fuelled the sector's recovery even in the face of rising mortgage rates.
Shares of Tesla Motors sank 14.8% to $108.44 after Goldman Sachs Group set a new price target far below the current trading price.
