NEW YORK: Wall Street ended its four-day rally on Tuesday (Jan 22) as a gloomy global economic growth outlook and disappointing company forecasts dampened investor spirits at the height of fourth-quarter reporting season.
All three major US stock indices extended their losses after the Financial Times reported the Trump administration rejected an offer from China for preparatory talks ahead of next week's high-level trade negotiations.
The International Monetary Fund trimmed its 2019 global economic growth estimates on Monday, the same day data from China confirmed the country's slowest economic growth rate in 28 years.
"There's so much in the background - trade, government shutdown, earnings season - you're going to have these big swings in the markets based on the latest data," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
"(Investors) are getting more bearish and less optimistic about the outlook," Nolte added. "We had a momentum low on Christmas Eve and I think we'll wind up testing it over the next couple months or so."
The downbeat China news pulled chipmakers lower, with the Philadelphia SE Semiconductor index falling 3.1 per cent.
Each of the FAANG momentum stocks, a group which includes Facebook Inc, Apple Inc, Amazon.com, Netflix Inc and Google parent Alphabet Inc, were down between 1.7 and 4.6 per cent.
Fears of a slowdown in corporate profits were exacerbated as companies posting fourth-quarter results provided disappointing forward-looking projections.
Johnson & Johnson was down 2.3 per cent after its 2019 sales forecast fell short of analyst expectations.
Shares of Stanley Black & Decker Inc slid following its disappointing 2019 forecast, dropping 13.7 per cent.
The Dow Jones Industrial Average fell 301.87 points (1.22 per cent) to 24,404.48, the S&P 500 lost 37.81 points (1.42 per cent) to 2,632.90 and the Nasdaq Composite dropped 136.87 points (1.91 per cent) to 7,020.36.
All 11 major sectors of the S&P 500 were in the red, with the largest percentage losses coming from industrials, communications services and tech.
With just over 12 per cent of S&P 500 companies having reported thus far, 78.7 per cent of have beat Street expectations. Analysts expect S&P 500 fourth quarter earnings growth of 14.1 per cent, down from 20.1 per cent on Oct 1, according to Refinitiv data.
Oilfield services company Halliburton Co dropped 3.2 per cent as falling oil prices and slowing US demand weighed on its fourth-quarter results.
Travelers Cos Inc reported better-than-expected quarterly profit as premium hikes offset catastrophe losses such as the California wildfires and Hurricane Michael. The stock was trading lower, down 1.5 per cent.
Amid the government shutdown-related dearth of US economic data, a report from the National Association of Realtors showed sales of existing homes in the United States fell in December to their lowest level in three years.
The PHLX Housing index was down 1.9 per cent.
Declining issues outnumbered advancing ones on the NYSE by a 3.83-to-1 ratio; on Nasdaq, a 3.14-to-1 ratio favoured decliners.
The S&P 500 posted three new 52-week highs and one new lows; the Nasdaq Composite recorded 18 new highs and 26 new lows.