Wall St. lower as IBM, United Tech results weigh

By Chuck Mikolajczak

(Reuters) - U.S. stocks fell on Tuesday in the wake of results from IBM and United Technologies which curbed some optimism over earnings season while investors awaited quarterly profits from tech giants including Apple and Microsoft.

The Dow fell over 1 percent, with IBM and United Tech contributing around 126 points to the drop. The decline put the blue-chip index on track for its biggest percentage decline in about two weeks.

IBM's shares were down 6.2 percent to $162.42, a day after the company's revenue dropped for the 13th consecutive quarter and fell short of analyst's expectations.

Fellow Dow component United Technologies tumbled 7.6 percent to $102.06 and was the worst performer on the Dow after the company cut its full-year profit outlook.

"For the first time in a while, fundamentals seem to be driving the action today in an otherwise very quiet macro backdrop and probably will continue to do so for the next couple of weeks as we work through the heart of earnings season," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.

Apple , Microsoft and Yahoo are scheduled to report results after the market close. Strong earnings from technology companies have helped drive gains on the Nasdaq, which has outperformed both the Dow and S&P 500 in July.

While markets are near record highs, June-quarter earnings of S&P 500 companies are expected to dip 1.9 percent, according to Thomson Reuters data. That marks an improvement from the expected decline of 3 percent on July 1, but well below the 5.9 percent gain forecast on January 1.

Of the companies that have reported earnings so far, 70 percent have reported earnings above analyst expectations, above the 63 percent average beat rate since 1994.

However, 53 percent have topped revenue forecasts, below the 61 percent average beat rate since 2002. U.S. companies are expected to post their worst sales decline in nearly six years in the second quarter, in part due to the strong dollar that reduces the value of U.S. companies' overseas income.

The Dow Jones industrial average fell 204.51 points, or 1.13 percent, to 17,895.9, the S&P 500 lost 9.58 points, or 0.45 percent, to 2,118.7 and the Nasdaq Composite dropped 9.25 points, or 0.18 percent, to 5,209.61.

Apple shares weighed on the Nasdaq, down 0.8 percent at $131.06. The company experienced an outage with its App Store, Apple Music, iTunes Store and some other services for more than three hours.

Lexmark International slumped 20 percent to $37.85, its lowest in 18 months, after the printer maker said it would cut 500 jobs, or about 4 percent of its global workforce.

Declining issues outnumbered advancing ones on the NYSE by 1,852 to 1,187, for a 1.56-to-1 ratio on the downside; on the Nasdaq, 1,575 issues fell and 1,172 advanced for a 1.34-to-1 ratio favouring decliners.

The S&P 500 posted 28 new 52-week highs and 24 new lows; the Nasdaq recorded 89 new highs and 100 new lows.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)