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US stocks drop; Nasdaq falls 1.3%

US stocks fell sharply with the tech-rich Nasdaq suffering the deepest declines as the second-quarter earnings season kicked off.

NEW YORK: US stocks on Tuesday fell sharply with the tech-rich Nasdaq suffering the deepest declines as the second-quarter earnings season kicked off.

The Dow Jones Industrial Average dropped 117.59 points (0.69 per cent) to 16,906.62.

The broad-based S&P 500 fell 13.94 (0.70 per cent) to 1,963.71, while the Nasdaq Composite Index slumped 60.07 (1.35 per cent) to 4,391.46.

The selloff extended Monday's losses, which came on the heels of record highs notched last week.

Some market observers have predicted a pullback given the latest surge in equities, while others express concern that the Federal Reserve could accelerate its plan to raise interest rates next year.

Twitter (-7.0 per cent) led a plunge in tech stocks, which saw big losses in Facebook (-3.9 per cent), Netflix (-3.4 per cent) and Google (-1.9 per cent).

Dow component Boeing dropped 1.8 per cent following a Standard & Poor's report that said the closure of the US Export-Import Bank could harm the aviation giant's long-term credit profile. Some congressional Republicans want to shut the bank, whose authority expires on September 30.

US sporting goods giant Nike dropped 1.3 per cent as it said it would end its sponsorship of British football team Manchester United. Nike said the terms offered "did not represents good value" for its shareholders. Manchester United also fell 1.3 per cent.

US drugmaker AbbVie raised its informal bid for Shire Pharmaceuticals to 51.15 pounds (US$87.56) from 46.26 pounds (US$79.19) after Shire, which is headquartered in Ireland, previously rejected the offer as undervalued. AbbVie dropped 3.0 per cent.

Earnings season for the second quarter kicked off after the markets closed, with the release of financial results from aluminium producer Alcoa.

Alcoa reported net income of US$138 million, up from US$119 million loss in the year-ago period. That translated into earnings of 18 cents per share, six cents above expectations. Alcoa shares gained 1.5 per cent in after-hours trading.

Bond prices rose. The yield on the 10-year US Treasury dropped to 2.57 per cent from 2.62 per cent Monday, while the 30-year fell to 3.38 per cent from 3.44 per cent. Bond yields and prices move inversely.

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