* IBM, eBay among biggest decliners after results
* Financial sector has reported strong earnings so far:analyst
* Chinese rating agency cuts U.S. sovereign credit rating
* Indexes: Dow off 0.6 pct; S&P off 0.2 pct; Nasdaq off 0.3pct
By Angela Moon
NEW YORK, Oct 17 (Reuters) - U.S. stocks fell on Thursday asinvestors shifted their focus to earnings of heavyweightcompanies such as IBM, in the wake of an agreement by lawmakersin Washington to reopen the federal government and raise thedebt ceiling.
International Business Machines Corp was among thebiggest decliners, hitting a two-year low a day after reportinga 4 percent drop in third-quarter revenue, worse than expected,amid a decline in hardware and emerging markets even as it beatprofit estimates.
As of Wednesday's close, 61 companies representing 18.8percent of S&P 500's market-cap have reported, with revenuesmissing expectations by 0.5 percent and earnings beatingforecasts by 4.5 percent, according to RBC Capital Markets.
Earnings have been particularly strong for financials withresults beating expectations by 6.2 percent and year-on-yeargrowth of 16.4 percent, said Jonathan Golub, chief U.S. marketstrategist at RBC. Excluding financials, results have surprisedby 3.3 percent and grew by 8.6 percent for those that havereported.
"While investors had been concerned about lower FICC tradingactivity and mortgage volumes, this seems to have been offset bystronger loan activity and improved credit quality," Golub said.
On Thursday, 24 companies representing 7 percent of the S&P500 index report results, including Google after themarket close.
The Dow Jones industrial average was down 85.91points, or 0.56 percent, at 15,287.92. The Standard & Poor's 500Index was down 3.80 points, or 0.22 percent, at 1,717.74.The Nasdaq Composite Index was down 9.89 points, or 0.26percent, at 3,829.54.
IBM shares were down 6.5 percent at $174.69 after hitting atwo-year low of $172.57 shortly after the open. It was thebiggest one-day decline for the stock since April 19, also afterquarterly results.
Goldman Sachs shares fell 3 percent to $157.45 afterthe fifth-largest U.S. bank by assets said its quarterly profitdropped amid weak bond-trading volumes.
But Verizon Communications Inc shares rose 2.6percent to $48.49 after the company posted stronger-thanexpected third-quarter earnings and revenue.
EBay Inc dropped 5.2 percent at $50.71 after thecompany gave a disappointing holiday forecast on Wednesday,saying the U.S. economic environment had deteriorated partlybecause of the government shutdown.
Also weighing on the market, China's Dagong Global CreditRating said the temporary fix of the U.S. debt issue would notsolve the fundamental conundrum of the massive U.S. fiscaldeficit or improve repayment ability in the long term, but couldtrigger defaults at any time in the future.
Data on Thursday showed the number of Americans filing newclaims for unemployment benefits dropped from a six-month highlast week, but remained elevated as California continued to dealwith a backlog related to computer problems. The report barelymoved the market.
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