The stock market dropped on Tuesday as a weak financial outlook from UPS weighed on investor sentiment and pressured transportation stocks, though other corporate results limited the market's losses.
The Dow Jones industrial average fell 70,48 points, or 0.42 percent, to close at 16,912.11, according to preliminary figures. The Standard & Poor's 500-stock index lost 8.96 points, or 0.45 percent, to 1,969.95. The Nasdaq composite index dropped 2.21 points, or 0.05 percent, to 4,442.70.
Shares of United Parcel Service fell 3.7 percent to $98.86 after the world's biggest courier company slashed its earnings forecast for the year because of spending to increase its capacity. It also reported earnings that were below expectations.
Fedex, UPS's rival, dropped 1.6 percent to $147.14. The Dow Jones Transportation index, which is often viewed as a proxy for business activity, fell 1.38 percent.
UPS is the latest bellwether name to disappoint in its results, following Amazon.com and Boeing last week. Nonetheless, this earnings season has largely been a positive for equities. With more than half the S.&P. 500 having reported, almost 70 percent have topped earnings expectations, according to Thomson Reuters data, well above the long-term average of 63 percent. More than 63 percent have topped revenue forecasts, above the long-term average of 61 percent.
"If we started to see more negative outlooks, that would be a reason to pause, but so far this earnings season speaks to the health of corporate America and suggests markets still have room to run," said David Lebovitz, global market strategist at J.P. Morgan Funds.
Telecommunications stocks were by far the strongest of the day, up 2.2 percent after Windstream Holdings filed to spin off assets into a tax-efficient publicly traded real estate investment trust. Windstream's stock jumped 12.4 percent to $11.83 in its busiest trading day on record. Frontier Communications added 11.1 percent to $6.60.
Two Dow components, Merck and Pfizer, reported better-than-expected results. Merck's new drugs offset declining sales of ones facing generic competition and Pfizer was helped by growing sales of its cancer medicines. Merck rose 1.1 percent to $58.58, while Pfizer dropped 1.2 percent to $29.73.
Corning plunged 9.3 percent to $20 after reporting earnings that came in below estimates.
In economic news, consumer confidence jumped in July to a high not seen since October 2007, but single-family home prices dropped 0.3 percent in May on a seasonally adjusted basis, falling short of expectations.
The Federal Reserve began a two-day meeting on monetary policy. The Fed could make subtle yet telling changes to its policy statement due Wednesday, as it plans how and when to eventually raise interest rates.
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