US stocks fall after disappointing earning reports from industrials

U.S. stocks fell on Thursday as weak earnings reports from industrials raised worries over rising expenses and the impact of tariffs, adding to concerns of higher borrowing costs after hawkish commentary in the Federal Reserve's minutes.

The U.S.-China trade war, higher rising borrowing costs and wage pressures have been the main concern of investors as the third-quarter earnings season gains steam, and contributed to last week's selloff.

Shares of Textron fell 9 per cent after reporting a lower-than-expected quarterly profit, hit by a drop in sales of its turboprop aircraft as well as flat deliveries of its flagship Cessna business jets.

Industrial equipment rental company United Rentals fell 6.1 per cent and hand tools maker Snap-on Inc 7.6 per cent after results.

Sealed Air Corp shares tumbled 8.1 per cent after the packaging company lowered its full-year profit outlook due to higher-than-expected raw material and freight costs.

Nine of the 11 major S&P 500 sectors were lower led by a 1 per cent decline in industrial stocks. Only defensive utilities and consumer staples, and real estate stocks were trading higher.

The Fed's view, detailed in the minutes of its September meeting released on Wednesday, bolstered expectations of a fourth interest rate hike in December and more next year, despite President Donald Trump's sharp criticism.

The hawkish commentary also sent yields on the benchmark 10-year Treasury notes back to multi-year highs touched last week, which contributed to the sell-off in equities.

"If interest rates continue to move higher from their current levels, investors will become even more reluctant to buy the dips in stocks," Hussein Sayed, chief market strategist at FXTM, wrote in a note.

At 9:40 a.m. EDT the Dow Jones Industrial Average was down 147.63 points, or 0.57 per cent, at 25,559.05, the S&P 500 was down 15.44 points, or 0.55 per cent, at 2,793.77 and the Nasdaq Composite was down 45.72 points, or 0.60 per cent, at 7,596.98.

Profits at S&P 500 companies are expected to have risen 21.9 per cent in the quarter, according to I/B/E/S Refinitiv. Of the 51 companies that have reported so far, 84.3 per cent have beaten analyst expectations.

Among gainers were Alcoa shares, which rose 7.9 per cent after the top U.S. aluminium producer reported a better-than-expected quarterly profit, as a series of supply hits boosted alumina prices.

Philip Morris gained 2.9 per cent after Marlboro cigarette maker topped analysts' estimates for quarterly profit and sales.

Declining issues outnumbered advancers for a 3.07-to-1 ratio on the NYSE and a 2.52-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 17 new lows, while the Nasdaq recorded six new highs and 32 new lows.

(With inputs from agencies.)