Wall Street plunges on weak earnings, Spanish fears; Dow off 1.82%

Investing.com - U.S. stocks closed sharply lower Tuesday, as market sentiment remained under pressure following weak earnings reports and after Moody’s lowered credit ratings on five Spanish regions late Monday. 

At the close of  U.S. trade, the Dow Jones Industrial Average tumbled 1.82%, the S&P 500 index plunged 1.44%, while the Nasdaq Composite index dropped 0.88%. 

Triggering the sell off,  ratings agency Moody’s cut the credit ratings of Catalonia and four other Spanish regions late Monday, citing their worsening liquidity positions and predicting that these regions are likely to ask the central government for aid in 2013.

The downgrade comes on the heels of regional elections in Spain. Prime Minister Mariano Rajoy’s center-right Popular Party increased its majority in his home region of Galicia on Sunday, removing a possible obstacle to formally requesting financial aid from Spain’s euro zone partners. 

Investors were also eyeing the Federal Reserve's two-day policy-setting meeting, which kicks off later in the day, after the central bank announced its third round of quantitative easing last month. 

DuPont tumbled 6.83% after the chemical company reported a profit that fell short of expectations and announced 1,500 layoffs in an aggressive cost-cutting move. 

Also on the downside, United Technologies dropped 0.57%, as it reported a decline in third-quarter earnings and cut its sales forecast for the year, citing weak demand from airlines and an uncertain economy. 

Elsewhere in the tech sector, Apple plunged 1.31%, even as it was expected to make its biggest product move since the iPad's debut two years ago, by launching later in the day a smaller, cheaper tablet. 

RadioShack dove 11.72% after the consumer-electronics retailer badly missed estimates due to weak margins in its smartphone business. 

On the upside, Yahoo surged 3.23% after the Internet company posted quarterly results that easily beat expectations on Monday. 

Marissa Mayer, who took over in July as the company’s fifth chief executive officer in four years, said that the company will emphasize on mobile technology and personalized services in a strategy to reverse a sales decline. 

Other stocks in focus included Amgen, Facebook, Netflix, Gilead Sciences, due to report earnings later in the day. 

At the close of European trade, the EURO STOXX 50 plunged 2.10%, France’s CAC 40 plummeted 2.40%, while Germany’s DAX 30 was smacked lower by 2.11%. 

Investors are awaiting the U.S new home sales numbers and the interest rate decision on Wednesday.