Wall Street tumbles, hit by weak earnings, China

By Sinead Carew

REUTERS - Wall Street tumbled on Friday, with the major indexes down one percent or more, on investor concerns over new regulations in China, Greece's debt negotiations and disappointing earnings reports from U.S. corporations.

All ten major S&P 500 sectors lost ground, with the S&P Financials index losing 1.24 percent and the S&P Consumer Discretionary index off by 1.27 percent.

"Today, it just seems the wall of worry is higher than it's been in a while because of Greece, oil, earnings and economic data from the past few days," said Jeffrey Carbone, senior partner, Cornerstone Financial Partners, in Cornelius, NC.

Both Honeywell International and General Electric blamed the strong dollar for lower revenue. Shares of Honeywell were down 1.6 percent at $102.29, while GE shares were up 0.3 percent at $27.35.

Dow component American Express, the world's largest credit card issuer, was the biggest drag on the index. It fell 4.3 percent to $77.37 after revenue missed analysts' estimates, partly due to the currency impact.

"Eventually, people have to say, 'OK, forget about the Fed and central bankers nonsense and focus on the fundamentals,' because if the large-caps are coming in with lower-than-expected earnings, then you know that other smaller companies will be in trouble," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

Chinese authorities lifted restrictions on short-selling while also warning against excessive borrowing on margin, two developments that could pressure that market.

China H-Share index futures fell 3.3 percent. Global equities lost ground as the weakness in China carried through to European markets and then into the United States.

"The restrictions on short-selling have been lifted in China and when one market sneezes, the rest of them usually react," said Saluzzi.

Market participants were also concerned Greece could leave the euro zone as it tries to reform its economy and deal with heavy debt. Greece dismissed reports it needed to tap remaining cash reserves to meet salary payments.

At 1:03 p.m. EDT (1703 GMT), the Dow Jones industrial average fell 241.83 points, or 1.34 percent, to 17,863.94, the S&P 500 lost 20.81 points, or 0.99 percent, to 2,084.18 and the Nasdaq Composite dropped 71.63 points, or 1.43 percent, to 4,936.16.

The U.S. quarterly earnings season has been mixed so far with more companies beating lowered expectations.

Declining issues outnumbered advancing ones on the NYSE by 2,467 to 502, for a 4.91-to-1 ratio; on the Nasdaq, 2,169 issues fell and 518 advanced for a 4.19-to-1 ratio.

The benchmark S&P 500 index was posting 2 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 31 new highs and 30 new lows.

(Additional reporting by Tanya Agrawal in New York, Editing by Bernadette Baum and Nick Zieminski)