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Disappointing start to the third quarter earnings season weighed on benchmarks on Tuesday. Alcoa unofficially kicked off the earnings season, with its earnings and revenues falling short of expectations, while a retreat in oil prices also hurt sentiments. Increase in production levels by OPEC coupled with a stronger dollar negatively impacted oil prices. The Nasdaq, on the other hand, was dragged down by declines in biotech stocks.

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) decreased 1.1%, to close at 18,128.66. The S&P 500 dropped 1.2% to close at 2,136.73. The tech-laden Nasdaq Composite Index closed at 5,246.79, losing 1.5%. The fear-gauge CBOE Volatility Index (VIX) surged 17.6% to settle at 15.74. A total of around 6.7 billion shares were traded on Tuesday, slightly lower than the last 20-session average of 6.8 billion shares. Decliners outpaced advancing stocks on the NYSE. For 85% stocks that declined, 13% advanced.

Disappointing Start to Q3 Earnings Season

Stocks were battered on Tuesday, thanks to a discouraging start to the third-quarter earnings season. Alcoa Inc.’s (AA - Free Report) shares tanked 11% after the company’s earnings and revenue grew less-than-expected. This was the biggest daily percentage drop for the stock since Aug. 8, 2011. Earnings per share for the company in the third quarter were 32 cents, less than the Zacks Consensus Estimate of 34 cents. Revenues of $5,213 million also trailed the Zacks Consensus Estimate of $5,334 million.

Alcoa also trimmed its revenue target for this year. For its Global Rolled Products, the company now expects revenues of $4.8 billion to $5 billion for 2016, down from $5 billion to $5.2 billion it expected earlier. For its Engineered Products and Solutions the company expects sales of $5.6 billion to $5.8 billion for 2016, down from its earlier view of $5.9 billion to $6.1 billion.

The aluminum giant, likewise, sees revenues from the Transportation and Construction Solutions unit in the band of $1.7 billion to $1.8 billion, down from the prior view of $2.1 billion (read more: Alcoa Misses Q3 Earnings, Sales Estimates; Shares Tank).

In the third quarter, earnings growth is expected to take a beating, which will be the sixth quarter in a row of earnings declines for the S&P 500 index. Total earnings for the index are expected to be down 3% from the same period last year on 1.2% higher revenues (read more: Will Earnings Growth Resume After the Q3 Earnings Season?).

Oil Prices Tumble

A retreat in oil prices also dented investors’ sentiment. The International Energy Agency said that oil production by the Organization of the Petroleum Exporting Countries (OPEC) rose to record highs in September, which eventually dragged oil prices down. The top energy watchdog said that OPEC crude output rose by 160,000 barrels a day (bpd) to a record 33.64 million bpd last month.

A stronger dollar too had a negative impact on oil prices. The dollar strengthened on rising expectations of an imminent rate hike. The WSJ Dollar Index, which measures the dollar against a basket of 16 other currencies, rose 0.8% yesterday. On the other hand, WTI crude declined 1.1% to $50.79 per barrel, while Brent crude slipped 1.4% to $52.41 a barrel.

Biotechs Weigh on Nasdaq

Broad based selloff among biotech stocks adversely affected the Nasdaq. The iShares Nasdaq Biotechnology (IBB) declined 3.8%, while the broader Health Care Select Sector SPDR ETF (XLV) fell by 2.5%, the highest among the S&P 500 sectors.

Key biotech stocks such as Biogen Inc. (BIIB - Free Report) and Amgen Inc. (AMGN - Free Report) decreased 2.1% and 2.4%, respectively. Both the two companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks That Made Headlines

Dover Cuts 2016 EPS & Revenue Outlook, Shares Fall

Dover Corporation (DOV - Free Report) trimmed its full-year 2016 EPS and revenue outlook. (Read More)

Rent-A-Center Stock Tumbles on Bleak Q3 Preliminary Results

Rent-A-Center, Inc. (RCII - Free Report) issued dismal preliminary guidance for third-quarter 2016. (Read More)

Gibraltar Buys Nexus for $25M, Boosts Greenhouse Business

Gibraltar Industries, Inc. (ROCK - Free Report) reinforced its position in the United States commercial greenhouse market, by acquiring Nexus Corporation (‘Nexus’) for $25 million in an all-cash deal. (Read More)

International Flavors Completes Acquisition of David Michael

International Flavors & Fragrances Inc. (IFF - Free Report) recently announced that it has successfully completed the acquisition of Philadelphia, PA-based David Michael & Company, Incorporated. (Read More)

Comcast Coughs Up $2.3M to Settle False Billing Charges

Comcast Corporation (CMCSA - Free Report) has agreed to pay $2.3 million to the Federal Communications Commission as a settlement for its unlawful billing practices. (Read More)

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