Wall Street dips as third-quarter earnings season kicks off

U.S. stocks fell on Tuesday, ending a five-day winning streak, as investors focused on upcoming quarterly reports that are expected to reflect a dip in corporate earnings.

A surge in DuPont's (DD.N) stock helped keep the Dow Jones industrial average in positive territory but the S&P 500 and Nasdaq lost ground, with a sharp drop in biotech stocks.

The S&P health index (.SPXHC) lost 2.33 percent, the worst performer among the ten major S&P sectors. The sector has been under intense scrutiny over high drug prices.

The Nasdaq biotechnology index (.NBI) ended down 3.77 percent, recovering from deeper losses of around 6.6 percent.

The S&P 500 index had gained 5.6 percent over the previous five sessions, its best 5-day run since 2011, after a weak U.S. jobs report hinted at economic weakness but also lowered expectations the Federal Reserve will raise interest rates this year.

The International Monetary Fund cut its global growth forecasts for a second time this year, citing weak commodity prices and a slowdown in China.

Underscoring concerns about the world economy, S&P 500 companies are expected to report a 4.2-percent fall in earnings in upcoming third-quarter reports, the biggest decline in six years, according to Thomson Reuters data.

"It's been a while since we've gone into earnings season with the bar set so low, and that typically works to the advantage of stocks," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

Stock reactions to quarterly results over the next few weeks may provide signs of whether the equity market has hit rock bottom after over a month of global financial turbulence, Carlson said.

The Dow Jones industrial average (.DJI) edged up 0.08 percent to end at 16,790.19 points.

The S&P 500 (.SPX) lost 0.36 percent to 1,979.92 and the Nasdaq Composite (.IXIC) dropped 0.69 percent to finish the day at 4,748.36.

Seven of the ten major S&P sectors ended lower. The energy index (.SPNY) was up 2.23 percent, leading the advancers, after crude oil prices jumped.