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Stocks Slammed by Rocky Start to Earnings Season

Tickers in this article: FDX AMZN FOE ^DJI CMI ^GSPC COST TM ^IXIC CVX YUM AA HRB WMT

NEW YORK ( TheStreet) -- The major U.S. equity averages finished sharply lower on Wednesday as the early results for third-quarter reporting season exacerbated investor worries about a slowing global economy.

Energy stocks were especially weak after oil giant Chevron (CVX) gave a gloomy financial update, and Alcoa (AA) was a significant drag as well after the company delivered a surprise quarterly profit but moderated its global aluminum demand forecast.

"Today has been pretty emblematic of what we've been seeing in the marketplace where we're dealing with two forces that are pushing against each other," said Leo Kelly, managing director at Hightower. "On one side we have really a questionable earnings period ... and Europe's still not out of the woods, Spain's pushing back on the ECB in terms of the timing of their bailout. On the other side you have QE3 and just an astounding amount of liquidity washing through the market that was already awash in liquidity."

"We're definitely looking at tech, energy, materials, some of these more cyclical areas. Those are really going to tell us what is the impact of the global slowdown on the markets," said Kelly.

The Dow Jones Industrial Average fell nearly 129 points, or 0.95%, to close at 13,345, its lowest finish since Sept. 12, the day before the Federal Reserve announced a third round of quantitative easing.

Breadth was negative with losers far outpacing winners, 25 to 4, with Bank of America (BAC) finishing flat. Aside from Alcoa and Chevron, the biggest Dow decliners were Caterpillar (CAT) , Cisco (CSCO) , and Hewlett-Packard(HPQ) .

The top gainers were Wal-Mart Stores (WMT) , McDonald's (MCD) and JPMorgan Chase (JPM) .

Chevron shares slumped 4.2% after the company said third-quarter earnings would be "substantially lower" than in the second quarter as oil production declined in the first two months of the quarter and it received a lower price from the sale of oil.

The oil giant said production took a hit from a fire at its refinery in Richmond, Calif., and disruptions from Hurricane Isaac.

Aluminum producer Alcoa -- the first Dow component to report each quarter -- kicked off the unofficial start of the third-quarter earnings season Tuesday with a surprise profit , helped by productivity improvements and strong sales.

At the same time the company moderated its 2012 global aluminum demand forecast to 6%, down from 7%, as a slowdown in China slightly impacted its second half outlook. The stock closed down 4.6%.

Home Depot (HD) was weak after Oppenheimer downgraded the stock on valuation concerns. Shares dropped 2%.

Wal-Mart shares got a 1.7% boost after the world's largest retailer said it's testing same-day delivery for goods purchased online, presenting a threat Amazon's(AMZN) online business model. Amazon's stock fell 2.4%.

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