Wall Street indexes slide, AT&T down
By Gabriel Debenedetti | January 9, 2013 7:35 AM EST
Stocks dropped on Tuesday as investors pulled back from last week's rally on the "fiscal cliff" deal in Washington, and ahead of what is expected to be a weak earnings season.
Providers like AT&T pay hefty subsidies to handset makers so that they can offer device discounts to customers who commit to two-year contracts.
After a 4.3 percent jump in the two sessions around the close of the fiscal cliff negotiations, the S&P has fallen and investors have found few catalysts to extend the rally that took the benchmark to five-year highs.
"We had a brief respite courtesy of what happened on the fiscal cliff deal and the flip of the calendar with new money coming into the market," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
"But now the stark reality of uncertainty with regard to earnings, plus the negotiations on the debt ceiling, are there and that doesn't give investors a lot of reason to take bets on the long side."
The Dow Jones industrial average <.DJI> fell 73.68 points, or 0.55 percent, at 13,310.61. The Standard & Poor's 500 Index <.SPX> dropped 7.31 points, or 0.50 percent, at 1,454.58. The Nasdaq Composite Index <.IXIC> lost 12.53 points, or 0.40 percent, at 3,086.29.
Fourth quarter profits are expected to beat the previous quarter's lackluster results, but analyst estimates are down sharply from October. Quarterly earnings are expected to grow by 2.7 percent, according to Thomson Reuters data.
With AT&T's fall, the S&P telecom services index <.GSPL> was the worst performer of the 10 major S&P sectors, down 2.6 percent.
Markets went lower as some of the first reported earnings were weak.
"It doesn't seem to be bouncing back, it might stay here or sell off a little further," said Stephen Carl, head of U.S. equity trading at The Williams Capital Group in New York.
Shares of restaurant-chain operator Yum Brands Inc
Shares of Monsanto Co
Education provider Apollo Group and Dow component Alcoa Inc , the largest U.S. aluminum producer, round out the start of earnings season after the closing bell.
(Reporting by Gabriel Debenedetti; Editing by Kenneth Barry and Nick Zieminski)