* All 11 S&P sectors in negative territory
* Alcoa, Illumina plummet after disappointing reports
* St. Jude falls after warning on battery flaw in heart
* Indexes down: Dow 1.2 pct, S&P 1.4 pct, Nasdaq 1.7 pct
(Updates to late afternoon)
By Lewis Krauskopf
Oct 11 Wall Street sold off on Tuesday as
disappointing corporate reports gave a sour tone to the start of
earnings season and investors digested possible changing
dynamics for the upcoming U.S. elections.
Alcoa shares tumbled 10.9 percent after the metals
company's quarterly profit missed estimates and lowered its
Illumina shares plummeted 25.6 percent and were
among biggest drags on the S&P 500 after the diagnostic test
maker's weak quarterly update.
Investors have been looking for U.S. corporate earnings to
strengthen after four quarters of declines, in order to support
relatively high valuations for stocks. Although overall earnings
of S&P 500 companies are currently expected to fall 0.7 percent
in the third quarter, according to Thomson Reuters data, a
typical number of better-than-expected reports would result in a
"You are coming up against very low expectations, which
means the bar is already low. If you can't match those
expectations, then investors are going to quickly move to the
exit," said Adam Sarhan, chief executive at Sarhan Capital.
Market watchers are also increasingly eyeing politics as the
Nov. 8 U.S. elections draw near. Recent turmoil facing
Republicans and the party's presidential candidate Donald Trump
is leading to some speculation that a victory by Democratic
rival Hillary Clinton could be accompanied by big gains by her
party in Congress, investors said.
"There is more discussion that the control in Congress could
possibly shift," said Ernie Cecilia, chief investment officer of
Bryn Mawr Trust in Bryn Mawr, Pennsylvania. "The bottom line is
that it's not really priced into the market."
The Dow Jones industrial average fell 226.1 points,
or 1.23 percent, to 18,102.94, the S&P 500 lost 30.1
points, or 1.39 percent, to 2,133.56 and the Nasdaq Composite
dropped 89.32 points, or 1.68 percent, to 5,239.35.
All 11 major S&P sectors were negative. Healthcare,
one of the sectors thought to be most sensitive to the outcome
of the elections, led declines. The group slumped 2.6 percent,
with fallout from Illumina's report also weighing.
Another healthcare company, St Jude Medical, fell
3.4 percent after it said it would recall some of its implanted
heart devices due to risk of premature battery depletion. Abbott
Laboratories, which has agreed to buy St Jude, fell 5.4
Adding to potential obstacles for stocks, investors are now
bracing for the Federal Reserve to raise interest rates by the
end of the year after a recent run of solid economic data. The
dollar on Tuesday rose to its highest point since March
against a basket of currencies, a pressure point for
For the year, the S&P 500 is up about 4 percent.
Declining issues outnumbered advancing ones on the NYSE by a
8.38-to-1 ratio; on Nasdaq, a 5.36-to-1 ratio favored decliners.
The S&P 500 posted 4 new 52-week highs and 4 new lows; the
Nasdaq Composite recorded 42 new highs and 52 new lows.
(Additional reporting by Yashaswini Swamynathan in Bengaluru;
Editing by Anil D'Silva and Nick Zieminski)