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Stocks fall sharply on poor earnings

David Russell (david.russell@optionmonster.com)

Stocks are lower today as investors take profits from recent gains and earnings disappoint.

S&P 500 futures are down 1 percent and near their lows of the session, while European indexes have fallen 1 to 2 percentage points. Asia was mixed overnight, with Tokyo gaining almost 2 percent and Mumbai up 1 percent, while Chinese markets declined.

The S&P 500 has risen for five of the last six sessions after bouncing at key support around 2000 in mid-January. It's also trying to get back above the same 2065 level where it peaked earlier in the month.

A busy calendar of earnings and economic news will likely influence which way the market goes next. Technology giant Microsoft fell more than 7 percent on weak sales of its core Windows product. The news echoes a common refrain of weakening demand heard elsewhere in the sector from companies such as Seagate, KLA-Tencor, and SanDisk.

Contract manufacturing company Sanmina-SCI declined last night after revenue missed estimates and guidance disappointed. Dutch consumer-electronics giant Philips also dropped 5 percent on tepid sales, and Ericsson may fall on slow business with North American telecoms.

In the industrial sector, Caterpillar is down almost 6 percent after earnings and revenue lagged estimates. A strong dollar is also weighing on international giants like Pfizer and DuPont. Corning gained 2 percent after beating consensus.

The schedule remains very active today with Apple, the world's most valuable company, scheduled to report after the closing bell, along with companies like Yahoo, Juniper Networks, Amgen, United States Steel and Western Digital. Today's agenda brings several important items as well: durable-goods orders at 8:30 a.m. ET, the Case-Shiller index of home prices at 9 a.m. ET and consumer confidence at 10 a.m. ET.

Other catalysts in upcoming sessions that could impact sentiment include the negotiations of Greece's debt and the advance of Russian-backed rebels in southeastern Ukraine.

While the broader market has remained buoyant, no single group, sector or index has provided sustained leadership. Our researchLAB market scanner recently shows investors recently hunting for value in beaten-down energy and industrial stocks. Health care, utilities, and precious metals have traded best.

Commodities mostly little-changed today, though heavy snow in the Northeastern U.S. is lifting natural gas. A weak dollar is the main theme in currency markets as the greenback falls against the euro and Japanese yen.

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