U.S. stocks extended their losses into a second day on Wednesday as railroad operator CSX had its biggest drop in 11 years, pulling other industrial companies down with it.
Banks also fell as investors worried that lower interest rates will hurt their profits going forward. Investors expect the Federal Reserve to cut interest rates for the first time in a decade at their next policy meeting in two weeks.
The yield on the 10-year Treasury fell to 2.05% from 2.12% late Tuesday as investors headed for less risky holdings. Utilities, which are also considered a safer bet, made late gains and held up better than any other industry.
Abbott Laboratories gained 3.1% and pushed health care stocks higher after the maker of infant formula and drugs raised its forecast for the year. UnitedHealth Group also rose.
Health care was the only sector other than utilities to finish with modest gains. Technology stocks gave up early gains and finished lower along with the rest of the market.
The S&P 500 fell 19.62 points, or 0.7%, to 2,984.42. The Dow Jones Industrial Average fell 115.78 points, or 0.4%, to 27,219.85. The Nasdaq composite fell 37.59 points, or 0.5%, to 8,185.21. Small-company stocks also fell. The Russell 2000 index lost 11.22 points, or 0.7%, to 1,550.78.
Corporate earnings reports are getting into full swing this week, and investors have been mostly cautious in their assessments of them. Earnings are still expected to decline for S&P 500 companies in the second quarter.
CSX plunged 10.3% after saying it now expects its revenue to decline as much as 2% this year, after previously saying it expected growth. Investors read that as trouble for the entire industry and sent the stocks of other railroad operators lower. Union Pacific sank 6.1% and Norfolk Southern dropped 7.5%.
Netflix, which reported its results after the close of regular trading Wednesday, plunged 10% in after-hours trading after reporting a dramatic slowdown in growth during its traditionally sluggish spring season.
UnitedHealth Group, Phillip Morris and Morgan Stanley are scheduled to release their results Thursday.
Corporate profits have so far been beating Wall Street forecasts. But investors are keeping a close watch on the picture that companies paint for the second half of the year.
A weak home construction report loomed over companies that build homes. Hovnanian fell 3.1%, Lennar shed 2% and Toll Brothers fell 1.9%.
U.S. home construction slipped last month as an uptick in the building of single-family homes was offset by a big drop in apartment construction.
Cintas rose 8.7% after the uniform rental company beat analysts’ profit and revenue forecasts for its fiscal fourth quarter. The company also gave investors a solid profit forecast for its fiscal year.
Benchmark crude oil fell 84 cents to settle at $56.78 a barrel. Brent crude oil, the international standard, fell 69 cents to close at $63.66 a barrel. Wholesale gasoline fell 1 cent to $1.88 per gallon. Heating oil declined 1 cent to $1.89 per gallon. Natural gas fell 1 cent to $2.30 per 1,000 cubic feet.
Gold rose $12.10 to $1,421.30 per ounce, silver rose 29 cents to $15.89 per ounce and copper rose 2 cents to $2.71 per pound.
The dollar fell to 108.10 Japanese yen from 108.34 yen on Tuesday. The euro strengthened to $1.1223 from $1.1206.