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US stocks drop for 3rd day on lower earnings

Bernard Condon, AP Business Writer

Wingszi Chang, left, of Getco Securities, and Michael Smyth of MND Partners trade on the floor of the New York Stock Exchange Monday, July 23, 2012 in New York. The Dow Jones industrial average closed down 101.11 points to 12721.46. (AP Photo/Henny Ray Abrams)

NEW YORK (AP) -- Stocks are sliding on Wall Street on Tuesday following weak earnings from United Parcel Service and other major U.S. companies. The market was headed for its third loss in a row.

The Dow Jones industrial average dropped 87 points to 12,634 at 11:15 a.m. EDT. Cisco Systems fell the most of the 30 stocks in the Dow, nearly 5 percent, after the network equipment maker announced its latest round of staff cuts. Cisco dropped 77 cents to $15.30.

UPS cut its earnings forecast 4 percent for the year. The package delivery company cited global economic weakness and fear among its customers of a downturn. UPS' stock fell $3.45, or 4.4 percent, $74.50.

Chemical maker DuPont posted a 3 percent decline in net income for the second quarter on slower business in Europe and Asia. DuPont also reported revenue that fell short of Wall Street's expectations. DuPont lost 58 cents, or 1.2 percent, to $48.13.

The broader Standard & Poor's 500 fell seven points to 1,343. The Nasdaq composite also fell seven points, to 2,883.

Also weighing on stocks was a report from the Federal Reserve Bank of Richmond indicating that manufacturing in the central-Atlantic region is contracting. That followed reports of pullbacks in New York and Philadelphia.

"The economic data is raising questions about whether earnings won't weaken even more," said Carl Yingst, chief market analyst at Joseph Gunner, an investment bank. "Our guess is we haven't seen the worst."

If stocks continue to fall, it will be the third straight drop for the U.S. stock market. On Monday, the Dow fell 101 points after Spanish borrowing costs rocketed to the highest level since the euro started. Investors dumped stocks around the world.

Investors fear that Madrid may become the latest struggling European country to ask for a financial lifeline to pay its bills. Spain has already gotten help from its European partners to shore up its banks.

The yields on the 10-year Spanish government bond rose 0.1 percentage point early Tuesday to 7.53 percent, a dangerously high level. Investors are also selling Italian government bonds, sending the yield on that country's 10-year bond up 0.22 percentage points to 6.44 percent.

Late Monday, Moody's Investors Service issued a warning about the credit rating for Germany. Moody's anticipates that strong countries like Germany will have to shoulder a heavy financial burden as they support weaker countries like Spain and Italy. Moody's also said there was an "increased likelihood" that Greece would leave Europe's monetary union.

In other corporate news, Altria Group said its net income nearly tripled in the second quarter. Stock in the maker of Marlboro cigarettes rose 0.4 percent to $35.62. AT&T fell 1.9 percent after posting net income and revenue lower than what Wall Street analysts expected.

DeVry plunged $7.38, or 27 percent, to $20.18, the biggest drop in the S&P 500 index. The for-profit education company said enrollment is falling, forcing it to cut 570 jobs. The company also projected that its profit for the latest quarter will come in well short of analyst estimates.