A retreat in health care stocks pushed the broader market lower Wednesday as Pfizer's quarterly report and revenue outlook cooled investors' enthusiasm about the broader fourth-quarter earnings season.
The Dow Jones industrial average snapped a two-day winning streak, shedding 26.3 points, or 0.3 percent, to end at 10,270.55.
Its weakest component was Pfizer Inc., off 2.3 percent after it announced a smaller rise in its fourth-quarter net than analysts had expected. The company also scaled back revenue estimates for 2010, which weighed on other health care stocks, including Dow component Merck & Co., down 2.1 percent.
The financial, energy and basic-materials sectors were also weak on Wednesday, pushing the S&P 500 to a 0.6 percent decline. The Nasdaq composite index was up 0.85 point, nearly flat in percentage terms.
For at least the second earnings season in a row, Wall Street has welcomed improved bottom lines at most companies but seen little of a hoped-for increase in sales to suggest broader strength in the U.S. economy.
"Only about 30 percent of companies are reporting revenue increases, which bothers us," said David Prokupek, managing partner at Consumer Capital Partners, a Denver portfolio-management firm. "That's part of the reason we're in no man's land for the market right now."
More than three-fourths of S&P 500 companies that have reported fourth-quarter earnings so far have beaten analysts' expectations, according to Thomson Reuters. But the market has drawn little support from that improvement in corporate bottom lines, with the S&P 500 off about 4 percent since Alcoa Inc.'s early January report marked the symbolic start of the reporting season.
While investors always tend to recoil at earnings misses relative to expectations, the recent reporting season also has included several high-profile instances of investors selling a company's shares aggressively after it beats expectations. Such declines are often driven by investors using positive earnings news as an opportunity to take money off the table in stocks that enjoyed big gains in 2009.
One such example Wednesday was International Paper. The basic-materials bellwether saw its shares double last year, but they closed down 5.6 percent despite IP's announcement of a fourth-quarter loss that narrowed sharply and beat expectations.
