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Benchmarks ended in the red for the second-straight day, dragged down by declines in momentum stocks. Investors also remained cautious ahead of the start of the second-quarter earnings season. Shares of Internet and bio-tech stocks fell sharply on Tuesday, adding to the losses they suffered on Monday.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
 
The Dow Jones Industrial Average (DJI) declined 0.7% to close Tuesday’s trading session at 16,906.62. The Standard & Poor 500 (S&P 500) too dropped 0.7% to finish at 1,963.71. The tech-laden Nasdaq Composite Index closed at 4,391.46; declining almost 1.4%. The fear-gauge CBOE Volatility Index (VIX) surged 5.7% to settle at 11.98. Total volume on the New York Stock Exchange (NYSE) was about 3.3 billion. Decliners outpaced advancing stocks on the NYSE. For 59% stocks that declined, 38% advanced.
 
Declines in high-growth stocks dragged benchmarks down on Tuesday. The S&P 500 retreated further from Thursday’s record close; the twenty-fifth one for the year. However, the index recovered from the day’s initial lows and managed to close near its 14-day moving average of 1,964.61. The Dow dropped below the 17,000 mark after having closed above the key technical level for the first time on Thursday. The Nasdaq too posted its biggest drop in two months.
 
Internet stocks suffered heavy losses yesterday. Shares of Internet television network provider Netflix, Inc. (NASDAQ:NFLX), online retailer Amazon.com Inc. (NASDAQ:AMZN), online travel company TripAdvisor Inc. (NASDAQ:TRIP) and The Priceline Group Inc. (NASDAQ:PCLN) plunged 3.4%, 7.3%, 2.9%, 5.6% and 2.2%, respectively. The Consumer Discretionary Select Sector SPDR (XLY) declined almost 1.0%, the highest among the S&P 500 sectors.
 
Internet stocks from the Technology sector such as Groupon, Inc. (NASDAQ:GRPN), Yelp, Inc. (NYSE:YELP), LinkedIn Corporation (NYSE:LNKD), Yahoo! Inc. (NASDAQ:YHOO), FireEye, Inc. (NASDAQ:FEYE), Facebook, Inc. (NASDAQ:FB) and Twitter, Inc. (NYSE:TWTR) plummeted 2.6%, 6.7%, 6.3%, 2.8%, 8.6%, 3,9% and 7.0%, respectively.
 
Momentum names such as auto manufacturer Tesla Motors, Inc. (NASDAQ:TSLA) and Internet radio service provider Pandora Media, Inc. (NYSE:P) also incurred losses on Tuesday. Shares of Tesla Motors and Pandora Media declined 1.6% and 7.3%, respectively.
 
Bio-tech stocks also extended their losses on Tuesday. Shares of bio-tech companies such as Gilead Sciences Inc. (NASDAQ:GILD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) Amgen Inc. (NASDAQ:AMGN), Biogen Idec Inc. (NASDAQ:BIIB), Celgene Corporation (NASDAQ:CELG) and Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) decreased 0.1%, 1.9%, 0.2%, 2.5%, 3.5% and 0.3%, respectively. The Health Care Select Sector SPDR (XLV) declined 0.9%, the second biggest among the S&P 500 sectors. Overall, 9 out of 10 sectors of the S&P 500 ended in the red.
 
The Russell 2000 Index of small-cap stocks declined 1.2% on Tuesday. The index had declined 1.8% on Monday, its biggest drop since April 25.
 
Among other major releases, Wells Fargo & Company (NYSE:WFC) is expected to release earnings numbers on Friday. Next week, behemoths such as JPMorgan Chase & Co. (NYSE:JPM), The Goldman Sachs Group, Inc. (NYSE:GS), Intel Corporation (NASDAQ:INTC) and Google Inc. (NASDAQ:GOOG) are expected to post earnings results. According to FactSet Research Systems Inc. (NYSE:FDS), earnings for the S&P 500 are expected to rise 4.9% this quarter, outpacing the 2.1% rise reported in the first quarter of 2014.
 
On the economic front, the Board of Governors of the Federal Reserve System reported yesterday that consumer credit increased by $19.6 billion in May, following April’s $26.1 billion increase. This increase in the indicator of the potential future spending levels was more than the consensus estimate of an increase by $17.5 billion. Consumer credit increased at a seasonally adjusted annual rate of 7.50%. Non-revolving credit increased at an annual rate of 9.25%. Revolving credit rose at an annual rate of 2.50%.

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