US stocks fell on Tuesday, ending a five-day winning streak, as investors focused on upcoming quarterly reports that are expected to reflect a dip in corporate earnings.
A surge in DuPont's stock helped keep the Dow Jones industrial average in positive territory but the S&P 500 and Nasdaq lost ground, with a sharp drop in biotech stocks.
The S&P health index lost 2.33 per cent, the worst performer among the ten major S&P sectors. The sector has been under intense scrutiny over high drug prices.
The Nasdaq biotechnology index ended down 3.77 per cent, recovering from deeper losses of around 6.6 per cent.
The S&P 500 index had gained 5.6 per cent over the previous five sessions, its best 5-day run since 2011, after a weak US jobs report hinted at economic weakness but also lowered expectations the Federal Reserve will raise interest rates this year.
The International Monetary Fund has cut its global growth forecasts for a second time this year, citing weak commodity prices and a slowdown in China.
Underscoring concerns about the world economy, S&P 500 companies are expected to report a 4.2-per cent fall in earnings in upcoming third-quarter reports, the biggest decline in six years, according to Thomson Reuters data.
"It's been a while since we've gone into earnings season with the bar set so low, and that typically works to the advantage of stocks," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
Stock reactions to quarterly results over the next few weeks may provide signs of whether the equity market has hit rock bottom after over a month of global financial turbulence, Carlson said.
The Dow Jones industrial average edged up 0.08 per cent to end at 16,790.19 points. The S&P 500 lost 0.36 per cent to 1,979.92 and the Nasdaq Composite dropped 0.69 per cent to finish the day at 4,748.36.
Seven of the ten major S&P sectors ended lower. The energy index was up 2.23 per cent, leading the advancers, after crude oil prices jumped.
DuPont rose 7.67 per cent after CEO Ellen Kullman said she would step down.
Pfizer and Merck were down 2.06 per cent and 2.79 per cent, respectively, both the biggest drags on the S&P health index.
Pepsi rose 1.31 per cent after it reported better-than-expected quarterly results and raised its forecast for the year.
After the bell, shares of Yum! Brands dropped 16 per cent. The restaurant operator reported third-quarter results, including trouble in its key China operation, that disappointed investors.
Advancing issues outnumbered decliners on the NYSE by 1,675 to 1,357. On the Nasdaq, 1,554 issues fell and 1,233 advanced.
The S&P 500 index showed six new 52-week highs and one new low, while the Nasdaq recorded 34 new highs and 44 lows.
About 7.6 billion shares changed hands on US exchanges, just above the 7.4 billion average for the previous 20 sessions, according to Thomson Reuters data.
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