By Ryan Vlastelica
NEW YORK (Reuters) - U.S. stocks dropped 1 percent in a broad decline on Wednesday, with materials and energy shares leading the way lower as commodity prices dropped, while a selloff in Apple shares pressured the Nasdaq.
Apple Inc dropped 5.8 percent to $401.31, the stock's worst daily decline since January 24 after chipmaker Cirrus Logic gave a disappointing revenue outlook that raised concerns about weakening demand for Apple products.
All but two of the S&P 500's 10 major sectors dropped more than 1 percent while about four-fifths of stocks traded on the New York Stock Exchange and Nasdaq were lower.
The CBOE Volatility index, a measure of investor anxiety, spiked 26 percent, though action on the VIX was also influenced by the expiration of April futures contracts.
Mining and other materials companies sunk 2.6 percent while energy companies were off 2.6 percent as U.S. crude futures dropped 2.6 percent to $86.40 a barrel. Brent crude is on pace for its sixth straight daily decline.
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Financial stocks fell after Bank of America Corp posted revenue and profits that were below Wall Street expectations. Shares of the Dow component slumped 6.4 percent to $11.49.
"Banks are clearly struggling," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which has $760 billion in assets. "Loan growth has been disappointing, which points to economic growth not being robust."
The Dow Jones industrial average was down 174.93 points, or 1.19 percent, at 14,581.85. The Standard & Poor's 500 Index was down 28.51 points, or 1.81 percent, at 1,546.06. The Nasdaq Composite Index was down 72.28 points, or 2.21 percent, at 3,192.35.
The S&P information technology sector fell 2.6 percent. In addition to Apple Inc , which neared breaking below $400 per share for the first time since December 2011, Texas Instruments shed 4.6 percent to $34.10.
Intel Corp slipped 1.1 percent to $21.67 after the chipmaker said its current-quarter revenue would decline as much as 8 percent and it trimmed its 2013 capital spending plans.
Oil prices dropped on the prospect of sluggish fuel demand in the United States and China, a sign that economic growth was weak. Crude is down about 10 percent so far this year. Among the most active energy companies, Valero Energy dropped 4.2 percent to $37.97, while Halliburton Co was off 5.2 percent to $37.56.
Markets have been volatile this week, with the S&P moving more than 1 percent in each session, putting the VIX on track for its biggest weekly jump since May 2010. While the S&P is down 2.6 percent on the week, it posted its second-best daily performance of the year on Tuesday.
Adding another element of uncertainty to the market, the U.S. Secret Service said that a letter addressed to President Barack Obama containing a suspicious substance was received at a White House mail screening facility on Tuesday. The letter came on the heels of the bombing on Monday in Boston.
"The ongoing sequence of these terrorist incidents ... doesn't create an environment for good investor psychology," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama, who speculated that investors could move into government bonds from stocks if such events proliferated.
Yahoo Inc fell 0.9 percent to $23.57 after the Internet company reported first-quarter revenue that missed expectations, though many analysts raised their price targets on the stock.
Textron Inc was the biggest percentage decliner on the S&P 500, shedding 13 percent to $25.45 after cutting its full-year profit outlook on a decline in sales to the military.
On the upside, Mattel Inc rose 2.4 percent to $44 as the S&P's biggest gainer after the company reported earnings that topped forecasts, helped by cost controls.
With 9 percent of the S&P 500 having reported, 67 percent have beaten earnings expectations, even with the average over the past four quarters, but above the average of 63 percent since 1994.
S&P 500 earnings are now expected to have risen 1.7 percent in the first quarter, based on actual results from 42 companies and estimates for the rest, according to Thomson Reuters data. That expectation is up from a previous estimate of 1.5 percent growth at the start of the month. At the start of the year analysts saw earnings growing 4.3 percent.
Other S&P 500 companies expected to report on Wednesday include American Express Co , eBay Inc and Sandisk Corp .
The Federal Reserve is expected to release its Beige Book describing economic conditions at 2 p.m. (1600 GMT).
(Editing by Kenneth Barry and Nick Zieminski)