NEW YORK (Reuters) - United States stocks dropped on Thursday to hit session lows on news that a Malaysian passenger jetliner had been downed in Ukraine, fresh on the heels of new US and European Union sanctions on Russia.
A Malaysian airplane failed to enter Russian airspace when expected on Thursday and was found burning on the ground in eastern Ukraine, an aviation source told Reuters. "Clearly there is a lot of speculation, there are even videos surfacing on YouTube and the market is quite sensitive to things it can only verify by Twitter," said Mr Joseph Greco, managing director at Meridian Equity Partners in New York. "President Obama had some words about sanctions and as you know, that is going to be a bit of an issue."
The iShares China Large Cap ETF lost 0.8 per cent. The NYSEArce airline index was down 1.6 percent.
The US sanctions announced late Wednesday hit some of Russia's biggest firms while the EU sanctions were aimed at Russian companies that help destabilize Ukraine and will block new loans to Russia through two multilateral lenders. The Market Vectors Russia ETF dropped 5.5 per cent.
Equities had been holding near the unchanged mark earlier in the session, largely on the back of solid earnings from companies such as Morgan Stanley, which was down 0.1 percent at US$32.46, and UnitedHealth, up 3.4 per cent at US$86.62.
Microsoft shares rose 2.9 per cent to US$45.34 after the company said it would cut up to 18,000 jobs, or about 14 per cent of its workforce, resulting in pre-tax charges of $1.1 billion to US$1.6 billion over the next four quarters.
The Dow Jones industrial average fell 51.27 points or 0.3 per cent, to 17,086.93, the S&P 500 lost 9.51 points or 0.48 per cent, to 1,972.06 and the Nasdaq Composite dropped 28.99 points or 0.66 per cent, to 4,396.98.
Economic data on manufacturing and the labor market indicated the economy was gaining traction, although the housing market remains weak. The PHLX housing index lost 1.5 per cent.
S&P 500 companies' profits are expected to grow 4.9 per cent in the second quarter, according to Thomson Reuters data, down from the 8.4 per cent growth forecast at the start of April. Revenue is seen up 3 per cent.
Thomson Reuters data also shows that of the 66 companies in the S&P 500 that have reported earnings through Thursday morning, 68.2 per cent have topped Wall Street expectations, roughly in-line with the 67 per cent rate for the past four quarters and above the 63 per cent rate since 1994.