Wall Street's chronic inflation fears sent stocks skidding Tuesday as a sharp jump in producer prices overshadowed strong profit reports from several Dow Jones industrials. Heavy selling in the energy sector also pressured the major benchmarks.
Better-than-expected earnings from Johnson & Johnson, IBM and United Technologies were overlooked by investors preoccupied by the biggest increase in the Labor Department's producer price index in 15 years. The PPI rose 1.9 percent in September on high energy and food costs. With those costs removed, core PPI rose 0.3 percent, still higher than the 0.2 percent expected on Wall Street.
While a drop in crude oil futures may have mitigated those inflation concerns, they also may have contributed to a sharp sell-off in oil stocks, most notably Dow component Exxon Mobil. Aside from the energy sector, analysts said, the selling was relatively moderate, and many investors seemed to be standing pat.
The Dow fell 62.84, or 0.6 percent, to 10,285.26. The Standard & Poor's 500-stock index dropped 11.96, or 1 percent, to 1178.14. The Nasdaq composite index declined 14.30, or 0.7 percent, to 2056.00.
Johnson & Johnson, which reported profit that jumped 12 percent and beat Wall Street forecasts, nonetheless slipped 3 cents, to $62.97.
IBM gained 89 cents, to $83.48. It posted a slight decline in profit but beat analysts' expectations by 13 cents a share.
United Technologies fell $1.16, to $49.95, despite reporting positive growth across its diversified businesses, particularly in its Carrier heating and air-conditioning division.
3M jumped $2.24, to $74.71, as the manufacturer beat Wall Street forecasts by 4 cents a share and raised its outlook for the fourth quarter.
Merrill Lynch rose 12 cents, to $61.21. Earnings at the Wall Street firm rose 49 percent, to a new quarterly record.
Guidant, the world's second-biggest maker of implantable defibrillators, slid $8.28, to $64.10. Johnson & Johnson said it is considering "alternatives" to its plan to pay $25.4 billion for Guidant.
New York Stock Exchange composite index fell 92.93, to 7277.91.
American Stock Exchange index fell 23.38, to 1600.27.
Russell 2000 index of smaller-company stocks fell 8.01, to 625.36.
NYSE: 2.23 billion shares, up from 2.04 billion on Monday. Decliners outnumbered advancers 5 to 2.
Nasdaq: 1.48 billion shares, up from 1.29 billion. Decliners outnumbered advancers
2 to 1.
Crude oil for November delivery: $63.20, down $1.16.
Gold for current delivery: $472.10 a troy ounce, down from $474.10 on Monday.