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Benchmarks posted their fourth straight loss yesterday after some companies lowered their profit guidance. The downward revision of profit estimates further exposed the effects that global financial woes are having on domestic firms. Markets did initially react positively to news of Euro-zone finance officials agreeing to provide Spanish banks with multi-billion euro financial aid. However, the positive sentiment faded soon and the S&P 500 recorded its longest losing streak since May 18th.

The Dow Jones Industrial Average (DJI) was down 0.7% and closed at 12,653.12. The Standard & Poor 500 (S&P 500) dropped 0.8% and finished yesterday’s trading session at 1,341.47. The tech-laden Nasdaq Composite Index inched down 1% and ended at 2,902.33. The fear-gauge CBOE Volatility Index (VIX) gained 4.1% and settled at 18.72. Consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were roughly 6.22 billion shares, lower than the year-to-date daily average of 6.85 billion shares. For every couple of stocks that declined on the NYSE, one stock ended higher.

Initially, markets had opened higher and had a brief stay in the positive zone. The domestic markets got a cue from European markets’ encouraging positive finish, which was powered by euro-zone officials’ decision to provide multi-billion euro aid to Spanish banks. According to reports, Euro-zone finance officials have agreed to provide Spain with financial aid worth €30 billion by the end of this month.

However, markets lost their positive momentum soon enough and were down for the fourth-consecutive day. Tuesday also marked S&P 500’s longest losing streak since May, when it suffered 6 consecutive days of decline. Cummins Inc. (NYSE:CMI) was the second-largest loser in the S&P 500 after it slumped 8.9%. The engine maker guided down its sales estimates and the move weighed heavily on investor sentiment. Cummins had earlier projected a 10% increase in full-year revenue. However, the company now anticipates sales to remain flat compared with 2011 revenue figures. Also, the company expects second-quarter sales to total roughly $4.45 billion, which is significantly lower than Street estimates.

The downward revision not only dented the company’s shares but also affected the industrial sector, which eventually dragged down the broader markets. The Industrial Select Sector SPDR (XLI) slumped 1.6% and companies including Caterpillar Inc. (NYSE:CAT), Deere & Company (NYSE:DE), Masco Corporation (NYSE:MAS) and Astec Industries, Inc. (NASDAQ:ASTE) lost 3.5%, 2.4%, 3.5% and 4.2%, respectively.

Cummins was not the only company which revised profit estimates downwards as it was joined by a couple of tech firms. Applied Materials, Inc. (NASDAQ:AMAT) now expects sales for the year-ending October to come in below prior estimates of $9.1 billion to $9.5 billion. The company said “demand changes” will negatively impact earnings by 15 cents to 20 cents. Applied Materials said “weaker than expected near-term demand in its semiconductor equipment business, primarily among foundry customers” was the factor that was affecting its results.

Another tech firm, Advanced Micro Devices, Inc. (NYSE:AMD) also reduced its second-quarter revenue estimates. The chip maker expects revenues to fall 11% sequentially. The announcement was a big laggard on the company’s shares which slumped 11.2%.

Both Cummins and AMD cited roughly similar reasons for their downward revisions. Cummins’ Chairman and Chief Executive Tom Linebarger said: “Order trends in the U.S. for trucks and power generation equipment have softened and demand in Brazil, China and India is not improving as we had previously expected”. Meanwhile, AMD said: “Business conditions that materialized late in the second quarter, specifically softer-than-expected channel sales in China and Europe as well as a weaker consumer buying environment impacting the company’s business.” Clearly, both companies believe the slowdown in the global economy is responsible for their woes.

These comments accelerated investors’ apprehension about the global economic situation. More importantly, markets were weighed down by the fact that these global negative factors were denting corporate profits. After the markets closed on Monday, Alcoa Inc. (NYSE:AA), the world’s largest producer of aluminum, reported a second quarter loss. The company’s shares lost 4.1% yesterday.

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