Stocks drop before Alcoa reports better-than-expected earnings

Troubled tech stocks led the markets lower on Tuesday.

The Dow Jones Industrial Average fell 110.12 points to 13,473.53. The Nasdaq Composite Index lost 47.33 points to 3,065.02, its biggest one-day loss since June 25, and the S&P 500 Stock Index declined 14.40 points to 1,441.48.

The losses came on the fifth anniversary of the Dow Industrials record closing high in 2007 at 14,164.

Commodity prices rose sharply on Tuesday. Oil gained $3.06 to $92.39 a barrel, after China announced plans to support its economy. Gold rose $10.70 to $1,765 an ounce.

Nine out of 10 groups in the S&P 500 retreated as consumer discretionary and technology companies led declines. Intel Corp. (Nasdaq: INTC) slipped 2.7 percent as Sanford C. Bernstein & Co. downgraded the shares. Alcoa Inc. (NYSE: AA) rose 0.6 percent as the largest U.S. aluminum producer posted third-quarter earnings and sales that exceeded estimates.

“Everybody’s in a wait-and-see mode,” said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio. His firm oversees $14.7 billion. “We’re starting the earnings season, and we’ll get a clear-cut idea as to what’s going to unfold.”

Third-quarter profits and sales for the S&P 500 probably fell in unison for the first time in three years, according to analysts’ estimates compiled by Bloomberg. Per-share earnings may have dropped 1.7 percent on average after they were little changed in the second quarter. Sales may have slipped 0.6 percent, the data show.

Finance ministers from all the 27 countries in the European Union convened in Luxembourg on Tuesday in the lead-up to a summit of the region’s leaders in Brussels on Oct. 18-19. Ministers from the 17-nation euro area Monday declared the 500 billion euro ($649 billion) European Stability Mechanism operational. They also said Spain, the permanent rescue fund’s biggest potential near-term customer, isn’t on the verge of tapping it.

Consumer discretionary and technology companies slumped at least 1.3 percent as groups. Apple Inc. (Nasdaq: AAPL) lost 0.4 percent to $635.85 after earlier falling as much as 2.3 percent. Shares of the iPhone maker have fallen for four days, the longest losing streak since July. Apple is down 9.4 percent since reaching an all-time record of $702.10 on Sept. 19. The company is likely to face challenges beyond 2013 as smartphone penetration growth in developed markets slows, Nomura Holdings Inc. (NYSE: NMR) analyst Stuart Jeffrey wrote in a note.

“Apple took a turndown harder, and that put further pressure on the broader indices,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston, in an email. “Apple is trading at correction levels. This is basically a technical trading trigger.”

Edwards Lifesciences Corp. (NYSE: EW) erased 21 percent for the biggest drop in the S&P 500 to $84.60. The maker of a less- invasive heart valve generated an estimated $448 million in sales during the quarter, less than the $465 million to $485 million estimate in July, the company said Monday.

Netflix Inc. (Nasdaq: NFLX) lost 11 percent to $65.53 after Bank of America Corp. (NYSE: BAC) lowered its rating on the video-subscription service to "underperform" from "buy," citing increasing competition. The shares rose Monday to the highest since July after Morgan Stanley (NYSE: MS) upgraded the stock, saying competition from Amazon.com Inc.’s (Nasdaq: AMZN) Prime Instant service is “overblown.”

Owens Corning Inc. (NYSE: OC) slumped 8.3 percent to $31.12. The company said earnings before interest and taxes in 2012 will be no more than $310 million after predicting at least $360 million in August.