Stocks, Oil Continue Skid

Stocks were lower as a new earnings season approached and crude-oil prices continued to fall.

The Dow Jones Industrial Average was recently down about 60 points after its 161-point slide Tuesday. Its component Alcoa sank 3.9% ahead of its second-quarter report, due after the closing bell.

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That release will mark the symbolic start of the broader reporting season, which is likely to be lackluster. Wall Street is expecting an eighth straight quarter of declining profits in the S&P 500, led by raw-materials producers whose year-ago numbers will be tough to beat after the bursting of a multi-year commodity bubble last summer.

The broad Dow Jones-UBS Commodity Index was recently down about 2.5%, off more than 50% from its record set more than a year ago. Oil futures, which have been under particularly heavy pressure lately, were down $2.16 at $60.77 a barrel after a weekly report showed a build in U.S. fuel inventories.

How the stock market, which has suffered a correction in recent weeks after a springtime rally, will weather a grim profit season is also a key question. Some analysts and traders are guardedly optimistic, hoping that much of the bad news has been factored into stock prices during recent bouts of selling like the one on Tuesday.

"A little bit of trepidation ahead of earnings season is usually a good thing," said strategist Jeffrey Kleintop, of LPL Financial Services in Boston. "People are looking for businesses to say that they saw some improvement in their businesses during the quarter. The ones who don't say that will be penalized, but there's also room now for the ones who do say it to be rewarded."

According to Thomson Reuters, analysts expect the S&P 500's components to show a decline of about 36% in second-quarter earnings.

Ashwani Kaul, global head of research at Thomson Reuters, said the index's profits could "surprise" about four percentage points above the expectations, with Alcoa's report likely to play a more important tone than usual in setting the tone for the broader reporting season.

The aluminum maker is traditionally the first Dow component to report its results -- a distinction that traders in recent years have found less and less important. But under the current circumstances, Mr. Kaul said Alcoa could offer an important window onto the state of U.S. housing and manufacturing, key areas that will need to revive for there to be an end to the recession.

Steve Auth, executive vice president at Federated Global Investment Management, said Alcoa can beat expectations for a 34 cents per share loss, though many participants remain on the defensive because of fears stemming from recent economic reports.

"The jobs numbers last week still have everyone a little spooked," said Mr. Auth. "But at the same time, I don't think anyone wants to get too short ahead of that [earnings] number."

The S&P 500 and Nasdaq Composite Index were off about 1.1% each. The Russell 2000 was down 2.1%.

Treasury prices rose as investors sought safe harbor. The 10-year Treasury note climbed 19/32 to yield 3.384%. The dollar fell against the yen and rose against the euro