Wall Street slides overnight

Trader Luigi Muccitelli, left, works with specialist Allison Gamba on the floor of the New York Stock Exchange. File Photo / AP

Wall Street dropped amid disappointing earnings from US companies including Motorola and increased concern about escalating tension in Ukraine.

In late afternoon trading in New York, the Dow Jones Industrial Average dropped 0.96 per cent, the Standard & Poor's 500 index retreated 1.12 per cent, while the Nasdaq Composite Index fell 0.92 per cent.

Slides in shares of Intel and Chevron, down 3.7 per cent and 2.5 per cent respectively, dragged the Dow lower. Shares of Exxon Mobil slumped 2.2 per cent.

The recent declines have nearly wiped out the Dow's gains so far this year, now just up 0.2 per cent in 2014. The S&P 500 is still up 4.9 per cent this year.

Some of the latest earnings were disappointing. Shares of Motorola sank 4.6 per cent after the company posted quarterly results that failed to meet the mark.

Shares of Target slumped, last down 4.1 per cent, after the company warned its second-quarter profit will fall short of its prediction. The retailer will announce its full second-quarter results on August 20.

"While the environment in both the US and Canada continues to be challenging, and results aren't yet where they need to be, we are making progress in our efforts to drive US traffic and sales, improve our Canadian operations and advance Target's digital transformation," John Mulligan, interim CEO, said in a statement.

Meanwhile, another takeover battle was brewing. Dollar General is weighing a bid for Family Dollar Stores that would challenge Dollar Tree's US$8.5 billion takeover of the discount retailer, Bloomberg News reported, citing people with knowledge of the matter.

Dollar General is working with an adviser to evaluate its options and knows that banks are willing to finance a counterbid, one of the people said, asking not to be identified discussing private information, according to Bloomberg.

Shares of Dollar General climbed 3.1 per cent, shares of Family Dollar Stores gained 2.1 per cent, while those of Dollar Tree dropped 2.5 per cent.

The latest economic data were better than expected. An Institute for Supply Management report showed its non-manufacturing index climbed to 58.7 in July, up from 56 in June.

The data added weight to those believing the US Federal Reserve will have to start lifting its benchmark interest rate.

"The economy is normal, and a normal economy requires a normal interest rate, not a zero interest rate," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters.

In Europe, the Stoxx 600 Index finished the day with a 0.3 per cent increase from the previous close. The UK's FTSE 100 Index gained 0.1 per cent, while France's CAC 40 and Germany's DAX both rose 0.4 per cent.

Here, stronger-than-expected corporate earnings bolstered sentiment, with Deutsche Post and Credit Agricole exceeding expectations.