NEW YORK – U.S. stocks dropped Thursday on worries over Iran's nuclear intentions, doubts about corporate earnings and brokerage downgrades of blue-chip companies JPMorgan Chase & Co. (JPM) and Coca-Cola Co. (KO).
The Nasdaq Composite stock index snapped a seven-day winning streak and the Dow closed below 11,000 just three days after crossing the level for the first time in 4 1/2 years on Monday.
The Dow Jones industrial average ended down 81.08 points, or 0.73 percent, at 10,962.36. The Standard & Poor's 500 Index was down 8.12 points, or 0.63 percent, at 1,286.06. The technology-laced Nasdaq Composite Index was down 14.67 points, or 0.63 percent, at 2,316.69
The three major stock indexes had their worst percentage falls for the major indexes in more than two weeks.
U.S. Secretary of State Condoleezza Rice joined European powers in saying that Iran must be referred to the U.N. Security Council over its nuclear plans.
"The market is overbought short-term. We've had a huge move since the first of the year ... people are looking for an excuse to sell. That came in the form of Secretary Rice raising significant concerns about Iran's nuclear program," said Michael James, senior trader with regional investment bank Wedbush Morgan in Los Angeles.
Piper Jaffray lowered its rating on JPMorgan, saying healthy capital markets and synergies from the bank's merger with Bank One are now fully figured into JPMorgan's stock price. JPMorgan slid 1.8 percent to $39.95 on the New York Stock Exchange, a day after hitting its highest in more than 1 1/2 years.
Goldman Sachs cut its rating on Coca-Cola, the world's largest soft drink maker, on expectations of lower European demand. Coke shares fell 0.6 percent to $41.44 on the NYSE.
Profit warnings from RadioShack Corp. (RSH), the No. 3 U.S. electronics chain, and American Home Mortgage Inc., a U.S. real estate investment trust, stirred concern about the outlook for corporate earnings.
Shares of RadioShack Corp. fell 1.4 percent, or 31 cents, to end at $21.49 on the NYSE. American Home Mortgage Investment Corp. shares fell 10.7 percent, or $3.60, to $30, also on the NYSE.
"What little earnings reports we have had have been a little bit more disappointing than outperforming," Jim Paulsen, chief investment officer at Wells Capital Management, said.
The reporting period began this week with disappointing results from Alcoa Inc. .
The market's reaction was muted to economic data, including a narrowing in the U.S. trade deficit for November that exceeded expectations. U.S. import prices in December fell unexpectedly as the price of imported petroleum dropped for the third straight month. And new claims for U.S. unemployment benefits rose slightly less than expected in the latest week.
Iran has said it wants to pursue peaceful nuclear research,
but the United States and others are worried it could lead to the creation of nuclear weapons.
Markets are nervous that the dispute with Iran could lead to a supply disruption from the world's fourth-biggest crude exporter.
February crude settled unchanged at $63.94 a barrel, after shooting up to $65.05, the highest since Oct. 4, on the New York Mercantile Exchange.
Goldman also lowered its rating on brewer Anheuser-Busch Cos. Inc., (BUD) known for its Budweiser beer. Anheuser-Busch stock fell 1.6 percent, or 70 cents, to end at $42.41 on the NYSE.
Johnson & Johnson (JNJ) shares fell after medical-device maker Guidant Corp. said it had accepted a sweetened $23.2 billion offer from the diversified health products company. But rival bidder Boston Scientific Corp. (BSX) said the takeover battle wasn't over.
Shares of Johnson & Johnson, a Dow component, slipped 0.5 percent, or 29 cents, to $62.21. Guidant's (GDT) stock dipped 4 cents to $70.40, while Boston Scientific stock declined 1.4 percent, or 36 cents, to $25.05.
Volume was heavy, with about 1.7 billion shares changing hands on the NYSE, above last year's daily average of 1.61 billion. On Nasdaq, about 2 billion shares were traded.
Decliners beat advancers on the NYSE by about 2 to 1 and by about 3 to 2 on the Nasdaq.
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