* All 11 S&P sectors close in negative territory
* Alcoa, Illumina plummet after disappointing reports
* Dollar's rise, oil's decline also weigh
* St. Jude falls after warning on battery flaw in heart
* Indexes down: Dow 1.09 pct, S&P 1.24 pct, Nasdaq 1.54 pct
(Updates with close of U.S. markets)
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 11.4 percent after the metals
company's quarterly profit missed estimates and it lowered its
Illumina shares plummeted 24.8 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 S&P 500
earnings 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 positive quarter.
At the same time, investors are bracing for the U.S. Federal
Reserve to raise interest rates by the end of the year.
The initial disappointing reports have "led to a little bit
of fear on the part of some people that you won't get the
earnings growth you need to match up with what it is almost
inevitably an interest rate rise," said Rick Meckler, president
of LibertyView Capital Management in Jersey City, New Jersey.
"The offset to rising interest rates would have to be
In a potential obstacle to future profit growth, the dollar
on Tuesday rose to its highest point since March against
a basket of currencies, providing a pressure point for
multi-national companies that could eventually see their foreign
sales reduced when translated into the U.S. currency.
Market participants 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 Democrat
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 200.38 points,
or 1.09 percent, to 18,128.66, the S&P 500 lost 26.93
points, or 1.24 percent, to 2,136.73 and the Nasdaq Composite
dropped 81.89 points, or 1.54 percent, to 5,246.79.
All 11 major S&P sectors ended negative. Healthcare
, one of the sectors most sensitive to the outcome of
the elections, led declines. The group slumped 2.5 percent, with
fallout from Illumina's report also weighing.
Another healthcare company, St Jude Medical, fell
3.5 percent after saying it would recall some implanted heart
devices due to risk of premature battery depletion. Abbott
Laboratories, which has agreed to buy St Jude, dropped
Energy shares fell 1.2 percent as oil prices
retreated from one-year highs.
For the year, the S&P 500 is up 4.5 percent.
About 6.7 billion shares changed hands on U.S. exchanges,
slightly below the 6.8 billion daily average for the past 20
trading days, according to Thomson Reuters data.
Declining issues outnumbered advancing ones on the NYSE by a
6.96-to-1 ratio; on Nasdaq, a 5.10-to-1 ratio favored decliners.
The S&P 500 posted 4 new 52-week highs and 4 lows; the
Nasdaq Composite recorded 46 new highs and 59 lows.
(Additional reporting by Yashaswini Swamynathan in Bengaluru;
Editing by Anil D'Silva and Nick Zieminski)