Investing.com - U.S. stock markets closed sharply lower Tuesday, as investors continued to focus on rising borrowing costs for Spain and Italy.
At the close of U.S. trade, the Dow Jones Industrial Average gave back 0.82%, the S&P 500 index fell 0.90% while the Nasdaq Composite index plunged 0.94%.
Stock market sentiment was hit by fears that Spain will be the next country in the euro zone to require a full-scale bailout after the yield on Spanish 10-year bonds rose to a euro-era high of 7.60%, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Similar-maturity Italian yields rose to 6.5% for the first time since January.
Markets also remained jittery after ratings agency Moody’s revised its outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable. Moody’s rates all three at AAA.
Downbeat manufacturing reports out of the euro zone further weighed. Data released earlier in the session showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
In earnings news, trucking and logistics company Ryder System saw shares rally 8.1% after posting better-than-expected quarterly profit on higher lease and rental revenue. The company also lifted its full-year earnings outlook.
AT&T shares added 0.5% after reporting an increase in quarterly profit and revenue, as its wireless subscriber growth was better than expected.
On the downside, United Parcel Service shares lost 2% after the shipping company reported lower-than-expected profit and revenue for the second quarter, as increasing uncertainty in the U.S. and weakness in China and Europe shipments weighed.
The downbeat earnings prompted the company to lower its full-year earnings outlook, disappointing investors.
Shares in for-profit education company DeVry plunged 27% after warning that its fourth quarter results will likely fall far short of market expectations, as falling enrollment at its schools was likely to weigh on results.
Peabody Energy shares slumped 3.5% after the firm reported lower-than-expected second quarter earnings and forecast a third quarter profit below Wall Street expectations.
Meanwhile, shares in Apple rose 0.5% ahead of the release of its closely-watched fiscal third quarter earnings report due out after Tuesday’s closing bell.
Analysts are calling for earnings of USD10.36 a share on revenue of USD37.23 billion.
Broadcom, Netflix and Juniper Networks are also slated to release earnings after markets close.
At the close of European trade, the EURO STOXX 50 plunged 1.27%, France’s CAC 40 declined 0.87%, while Germany’s DAX 30 sank 0.45%
Investors are awaiting the German IFO sentiment numbers, U.S. new homes sales and New Zealand’s interest rate decision on Wednesday.
At the close of U.S. trade, the Dow Jones Industrial Average gave back 0.82%, the S&P 500 index fell 0.90% while the Nasdaq Composite index plunged 0.94%.
Stock market sentiment was hit by fears that Spain will be the next country in the euro zone to require a full-scale bailout after the yield on Spanish 10-year bonds rose to a euro-era high of 7.60%, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Similar-maturity Italian yields rose to 6.5% for the first time since January.
Markets also remained jittery after ratings agency Moody’s revised its outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable. Moody’s rates all three at AAA.
Downbeat manufacturing reports out of the euro zone further weighed. Data released earlier in the session showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
In earnings news, trucking and logistics company Ryder System saw shares rally 8.1% after posting better-than-expected quarterly profit on higher lease and rental revenue. The company also lifted its full-year earnings outlook.
AT&T shares added 0.5% after reporting an increase in quarterly profit and revenue, as its wireless subscriber growth was better than expected.
On the downside, United Parcel Service shares lost 2% after the shipping company reported lower-than-expected profit and revenue for the second quarter, as increasing uncertainty in the U.S. and weakness in China and Europe shipments weighed.
The downbeat earnings prompted the company to lower its full-year earnings outlook, disappointing investors.
Shares in for-profit education company DeVry plunged 27% after warning that its fourth quarter results will likely fall far short of market expectations, as falling enrollment at its schools was likely to weigh on results.
Peabody Energy shares slumped 3.5% after the firm reported lower-than-expected second quarter earnings and forecast a third quarter profit below Wall Street expectations.
Meanwhile, shares in Apple rose 0.5% ahead of the release of its closely-watched fiscal third quarter earnings report due out after Tuesday’s closing bell.
Analysts are calling for earnings of USD10.36 a share on revenue of USD37.23 billion.
Broadcom, Netflix and Juniper Networks are also slated to release earnings after markets close.
At the close of European trade, the EURO STOXX 50 plunged 1.27%, France’s CAC 40 declined 0.87%, while Germany’s DAX 30 sank 0.45%
Investors are awaiting the German IFO sentiment numbers, U.S. new homes sales and New Zealand’s interest rate decision on Wednesday.