Wall Street turned cautious Tuesday after a two-day rally and as downbeat corporate news reminded investors that the economy's troubles won't soon ease. The Dow Jones industrials fell 242 points, while broader indexes showed more moderate declines.
Investors worry that companies' difficulties could make an economic turnaround difficult. FedEx Corp. cut its forecast for fiscal 2009 earnings and capital spending late Monday as the slumping economy eroded package deliveries.
The unease has left the Dow down 242 at 8,691 level. All the major indexes are down well over 1 percent. But in a sign that the market is still willing to place some bets on an eventual recovery in the economy, companies that make microchips saw some buying Tuesday despite a disappointing forecast from Texas Instruments Inc. Some investors are anxious that they could miss a market bottom when defensive names like consumer goods companies likely would lag somewhat riskier bets like tech stocks.
The market's pullback wasn't a surprise given the steep advance of the past two sessions.
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Kevin Shacknofsky, co-portfolio manager of the Alpine Dynamic dividend fund, said the decline in financial names like JPMorgan Chase & Co. was to be expected after big gains.
"It's just profit-taking because they've come so far so quickly," he said.