Stocks were spanked last week in a global selloff that spared few markets. U.S. major indexes lost 2% to 3%, as investors expressed their dissatisfaction with second-quarter results from several bellwether companies.

Adding fuel to the pyre, continued mixed U.S. economic data and a bearish manufacturing figure from China led to an unhappy Friday, when the broad market fell 1%. In the background, growing ever nearer, is the month of September, when some expect the Federal Reserve to begin raising interest rates. The Fed’s easy-money policy has been a major factor in the six-year rally.

In particular, poor second-quarter results from United Technologies (ticker: UTX) caused a 10% drop in its shares, a major contributor to the Dow Jones Industrial Average’s 3% retrenchment to 17,568.53. United Technologies was worth 80 of the 518-point drop. Only five Dow stocks out of 30 rose on the week. Market sentiment, meanwhile, took a hit from another Dow member, Apple (AAPL). The world’s largest company by market capitalization produced softer-than-expected second-quarter iPhone sales, although earnings were strong.

Last week the Standard & Poor’s 500 index fell 47, to 2079.65, as each of its 10 sectors declined. The Nasdaq Composite lost 2.3%, or 122, to 5088.63. The MSCI World Index dropped 2% on the week.

With Greece out of the headlines—for now—and worries receding about the June plunge in Chinese equities, investors turned to corporate earnings. In contrast to the previous week, they didn’t like what they saw, says Mark Luschini, chief investment strategist at Janney Capital Management.

Several big names posted poor results, leading to increasing worries about the global economic landscape in general, and China in particular, says Dan Greenhaus, chief global strategist at BTIG. On Friday, preliminary data on U.S. manufacturing in July rebounded slightly, but similar data for China fell to a 15-month low. Worries about an interest-rate hike continue to nag investors, he adds.

(Source: Barrons Online)