Business

Stocks Decline Ahead of Earnings Season; Alcoa Flat

JeeYeon Park CNBC

Jan. 8, 2013 at 12:20 PM ET

Stocks added to losses Tuesday, dragged by telecoms, as investors kept to the sidelines ahead of the fourth-quarter earnings season that will kick off with Alcoa after the closing bell.

The Dow Jones Industrial Average declined, led by Verizon and AT&T, after finishing in the red in the previous session. 

The S&P 500 and the Nasdaq also edged lower. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14. (Read More: Why VIX's Recent Plunge May Be Bad for Stocks)

Among key S&P sectors, telecoms led the laggards, while health care held small gains.

S&P 500 companies are expected to post earnings growth of 2.8 percent for the fourth quarter, up from the barely positive 0.1 percent growth in the third quarter, according to Thomson Reuters. (Read More: Brace Yourself -- Earnings Disappointments Ahead)

European shares briefly dipped following market chatter that France's sovereign debt rating would be downgraded by Standard & Poor's. However, a senior French official said the rumors are "erroneous," while the ratings agency said it does not comment on market rumors. 

Alcoa struggled to hold small gains ahead of its earnings report. The Dow component and aluminum producer is expected to post earnings of 6 cents a share on revenue of $5.6 billion, according to analysts polled by Thomson Reuters.

Monsanto rallied after the agricultural biotechnology company boosted its earnings outlook for fiscal 2013 and handed in better-than-expected quarterly results. 

For-profit education company Apollo Group is also expected to post earnings after the closing bell. 

Yum Brands slipped after the fast food company reported that its China sales would be down more than expected due to a government review of the country's poultry supply.

Sears Holdings dropped following news that CEO Louis D'Ambrosio will step down and will be replaced by Chairman Edward Lampert.

Apple edged higher after DigiTimes reported that the tech giant is planning on manufacturing low-cost iPhones for emerging markets in the second half of 2013. The low-cost alternative will include a larger display and a new exterior design. (Read More: Samsung Galaxy's Big Bang Cements Lead Over Apple)

Separately, the Consumer Electronics Show in Las Vegas kicked off Monday night. Chipmakers such as Intel, Nvidia will be in focus. Large manufacturers such as Samsung, LG, Sony and Panasonic are expected to unveil new gadgets throughout the week. (Read More: Here's What to Expect at CES 2013)

AT&T declined even after the wireless communications company said it sold more than 10 million smartphones in the fourth quarter, topping its previous record of 9.4 million a year ago. The company is expected to post earnings results on January 24. Rival Verizon also traded lower. 

GameStop slumped to lead the S&P 500 laggards after the videogame retailer said it expects to post a decline in same-store sales for the fourth quarter due to a weak holiday season. 

The government is scheduled to auction $32 billion in 3-year notes with the results available shortly after 1pm ET. 

On the economic front, small business sentiment was mostly unchanged in December, as owners expect business conditions to deteriorate over the next six months, according to a National Federation of Independent Business survey. The December reading was the second lowest since March 2010.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week: 

TUESDAY: 3-yr note auction, consumer credit; Earnings from Alcoa, Apollo Group
WEDNESDAY: Weekly mortgage applications, oil inventories, 10-yr note auction; Earnings from Constellation Brands, PriceSmart
THURSDAY: Jobless claims, wholesale trade, natural gas inventories, Fed's George speaks, 30-yr bond auction, Fed's Bullard speaks, Fed's balance sheet, money supply, Fed's Kocherlakota speaks, Herbalife analysts day, videogame sales data release; Earnings from Chevron (interim report), Ruby Tuesday
FRIDAY: International trade, import and export prices, Fed's Plosser speaks, Treasury budget, Best Buy to report holiday sales; Earnings from Wells Fargo

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