Wall Street drops on earnings caution; Dow below 17,000
US stocks fell in a broad selloff today, dropping for a second straight session and driving the Dow below 17,000 as investors turned cautious before the start of earnings season.
The benchmark S&P 500 index, however, recovered from earlier lows and managed to hold near its 14-day moving average of 1,964.61. That would be a sign of weak near-term momentum if the S&P 500 declined below that level by a significant amount.
Nine of the 10 primary S&P 500 sector indexes declined, with only the defensive utilities group higher for the day.
The Dow Jones industrial average closed down 117.59 points, or 0.69 percent, to 16,906.62. The S&P 500 lost 13.94 points, or 0.7 percent, to 1,963.71 and the Nasdaq Composite dropped 60.067 points, or 1.35 percent, to 4,391.463.
Today's drop marked the biggest one-day decline for the S&P since May 15, and the index was on track to close under its 14-day moving average for the first time since May 20.
European equity indexes fell for a third consecutive session on reports Germany's largest lenders were negotiating a settlement with US authorities over their dealings with countries blacklisted by Washington. The talks follow a huge fine for French lender BNP Paribas.
At the close, the pan-European FTSEurofirst 300 index was down 1.3 percent at 1,363.46 points, extending losses in afternoon trade in line with US stocks.
The Euro STOXX 50 index was down 1.4 percent at 3,184.38 points, taking its fall over the last three days to 3.2 percent and leaving the index at its lowest since late May.
Euro zone banks fell 2.8 percent, the biggest sectoral faller, led lower by Commerzbank.
Shares in the German lender fell 5.6 percent as sources told reporters that US authorities had begun settlement talks with the bank and its larger rival Deutsche Bank, down 2.1 percent, over their dealings with countries blacklisted by the United States.
The New York Times reported that Commerzbank's settlement was expected to include at least $500 million in penalties. This compares with a settlement of almost $9 billion France's BNP Paribas struck in a similar case earlier this year.
Meanwhile, Japanese shares dropped pressured by an apparent halt in buying by public pension funds, losses on Wall Street and caution ahead of corporate earnings.
Japan's Nikkei share average fell 0.4 percent to 15,314.41. It touched its lowest level in a week, but held above major support from its 25-day moving average around 15,195. The broader Topix fell 0.3 percent to 1,275.70 with trading volume about 15 percent above the average in the past three months while the new JPX-Nikkei Index 400 shed 0.4 percent to 11,578.90.
The dollar fell against the Japanese yen as long-dated Treasuries yields dropped for a second day, with investors wary of riskier assets as the US earnings season began.
Safety buying of long-dated Treasuries is seen limiting dollar strength, at least in the near term. Three straight days of record closing highs for the S&P 500, the Dow and MSCI's all-country world index tamped down investor enthusiasm.
The ECB has made unprecedented policy moves in recent months to stimulate bank lending and revive the euro zone economy.
The dollar fell 0.27 percent against the yen to 101.55 yen. The euro rose 0.05 percent to $1.3611.
The 10-year US Treasury note rose 15/32 in price to yield 2.5612 percent.
Oil prices extended their recent decline as events in Iraq and Ukraine have so far not led to serious disruption in flows. Brent fell $1.30 to settle at $108.94 a barrel and US oil settled down 13 cents at $103.40 a barrel.