Dow tumbles 181 on weak IBM, United Tech earnings

Stocks fell sharply Tuesday as the Dow tumbled 181 points due to disappointing earnings results from components IBM and United Technologies.

Investors were also cautious ahead of earnings reports from tech giants and Dow components Apple (AAPL) and Microsoft (MSFT), released after the closing bell.

The Dow Jones industrial average ended down an even 1%. to 17,919.49 and the Standard & Poor's 500 index dropped 0.4% to 2119.21. The Nasdaq composite index fell 0.2% to 5208 as it pulled back from Monday's record closing high of 5218.86.

The big drag on the Dow was IBM, which topped earnings per share forecasts by 6 cents but it missed on revenues, with sales of $20.81 billion, below the $20.95 billion forecast. It was the 13th straight quarter IBM has posted revenues that were less than the prior quarter. IBM (IBM) shares shed 5.9%.

Also dragging down the Dow was United Technologies (UTX), whose shares ended down 7% after a revenue miss, and Verizon (VZ), which lost 2.4% after posting second-quarter earnings that did not wow investors.

Wall Street is refocusing on corporate earnings this week as the reporting seasons kicks in to high gear. Wall Street analysts currently expect S&P 500 companies to report 3.4% lower earnings in the quarter. Of the 61 S&P 500 companies to report second-quarter profit at this point, 43 have beaten expectations, 4 have matched and just 14 have missed, says S&P Capital IQ.

Investors are less worried about Greece, following a bailout deal agreed to last week between the Athens government and its creditors. “A near-term Greek resolution has allowed investors to re-focus on fundamentals,” Hamish Pepper of Barclays told clients in a report before the opening bell.

Gold continues to struggle amid improving economic data in the U.S. and the expectations for interest rate hikes from the Federal Reserve. After falling briefly below $1,100 an ounce yesterday to a five-year low, gold fell $3.30 Tuesday to $1,103.50.

The yield on the 10-year Treasury note fell to 2.34% from 2.38% Monday.

Overseas, European shares also fell. Germany’s DAX index dropped 1.1%, France’s CAC 40 was down 0.7% and Britain’s FTSE 100 was 0.3% lower.

In Asia, Japan’s Nikkei 225 index rose 0.9% to close at 20,841.97 while Hong Kong’s Hang Seng index gained 0.5%. The Shanghai Composite was up 0.6%.