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"The recession in Europe is very real," said Bernard Schoenfeld, senior investment strategist for Bank of New York Mellon Wealth Management in New York. "It’s not going to disappear very quickly, and it will certainly negatively affect earnings of exporters in the United States."
Companies are also blaming some of the revenue declines on the stronger dollar. As the dollar gains value, as it has over the past year, the money that multinational companies make overseas translates into fewer dollars back at headquarters.
"They’re feeling the pain of the stronger dollar," said Kathy Lien, managing director at BK Asset Management in New York. "Companies try to hedge, but they don’t always hedge perfectly."
This earnings season alone, Google, Philip Morris, IBM and Coca-Cola Bottling Co. have complained that the stronger dollar has hurt revenue, Lien noted.
The price of crude oil fell to a three-month low, another sign that investors expect a weak economy. The yield on the benchmark 10-year U.S. Treasury note sank to 1.76 percent late in the day, from 1.82 percent Monday, as nervous investors sold stocks and shifted money into low-risk U.S. government bonds.
Among other stocks making moves Tuesday:
— Luxury handbag maker Coach was a bright spot, reporting higher revenue for the latest quarter. It jumped $3.98, or 7.3 percent, to $58.15, making it among the best performers among S&P 500 stocks.
— Apple fell $20.67, or 3.3 percent, to $613.36 after it released a smaller version of the iPad, the Mini. It is meant to help Apple compete with Amazon’s Kindle Fire and Google’s Nexus 7. Apple priced the Mini higher — $329 for the basic model, compared with $199 for the cheapest Kindle Fire and Nexus 7. Apple has the most sway on the S&P 500 and the Nasdaq composite, so a poor day for Apple’s stock can weigh heavily on those indexes.
— Facebook gained 18 cents to $19.50 and climbed $1.60 more in after-hours trading after its earnings report provided evidence that the company is making inroads in mobile advertising, an investor concern.
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