Wall St dips from record high

Michael Pistillo, Jr., left, with Barclays and Tommy Kalikas with Livermore Trading Group follow stock prices at the New York Stock Exchange. File photo / AP

Wall Street fell overnight, retreating from record highs, as disappointing earnings from United Technologies and IBM gave investors a reason to pause.

In late afternoon trading in New York, the Dow Jones Industrial Average dropped 1.1 per cent, the Standard & Poor's 500 Index fell 0.4 per cent, while the Nasdaq Composite Index slipped 0.1 per cent.

Plunges in shares of United Technologies and those of IBM, last trading 7.7 per cent and 6.2 per cent lower respectively, dragged the Dow down.

United Technologies downgraded its 2015 profit forecast. On Monday the company agreed to sell its Sikorsky helicopter business.

"With six months of trends behind us, it is now clear the commercial aftermarket at UTC Aerospace Systems will be significantly below our expectations for the year," Gregory Hayes, UTC chief executive officer, said in a statement. "This, along with continuing softness in Otis Europe and a slowing China, led us to reassess our 2015 outlook for UTC Aerospace Systems and Otis."

"While this revised forecast is disappointing, we remain confident in our long term outlook for the business," Hayes said.

Analysts were not impressed.

The revised forecast suggests the company "hasn't been able to offset or anticipate weakness in several end markets," Jason Gursky, a Citigroup analyst, wrote in a note to clients, Bloomberg reported.

As for IBM, the company posted a decline in sales for a 13th consecutive quarter.

"Traditional software and services remain under pressure across IT, and we believe M&A remains one of the only glimmers of hope to restore growth back to these traditional tech giants that are starving for growth," Daniel Ives, an analyst at FBR Capital Markets, told Reuters.

Shares of Verizon Communications also declined after the company reported disappointing revenue and lowered its 2015 sales forecast.

Eyes are on Apple, Microsoft and Yahoo which are reporting their latest earnings later in the day.

Shares in Lexmark International plummeted, last down 20 per cent, after the company announced plans to slash 500 jobs, or about 4 per cent of its global staff.

The slide in equities increased the appeal of US Treasuries, pushing yields on the two-year note 2 basis points lower to 0.69 per cent.

Gold steadied after plunging earlier in the week as some investors viewed the slide as overdone. Still, with the US central bank poised to lift rates, and inflation low, the precious metal may continue to decline in the months ahead, some analysts said.

In Europe, the Stoxx 600 Index ended the day with a 1 per cent decline from the previous close. The UK's FTSE 100 Index fell 0.3 per cent, France's CAC 40 retreated 0.7 per cent, while Germany's DAX shed 0.8 per cent.

Stock markets in Greece remained closed.

Goldman Sachs recommends clients to favour European stocks over US assets. It upgraded its short-term view on European equities to "overweight" from "neutral" in a note dated July 20, which cited the recent deal to start negotiating a new Greece debt package as one of the reasons for a more positive view, and downgraded US equities to "underweight" from "neutral", according to Reuters.