Stocks extended losses on Tuesday with the S&P 500 breaking below a key support level before the start of first-quarter earnings season, Reuters reported.

The S&P 500 fell more than one per cent in midday trade to slide below its 50-day moving average of 1,372.30, an area viewed as the support level that will make or break the current uptrend.

The market’s losses were broad, with the industrial and materials sectors representing the stocks suffering the biggest declines.

The CBOE Volatility Index or VIX.VIX, Wall Street’s fear gauge, jumped 8.3 per cent to 20.39, and was up for the eighth straight day, its longest streak of consecutive gains in nearly nine years. At its session high, the VIX earlier touched 20.98 – up 11.5 per cent for the day.

Apple shares dropped quickly from hitting a new high of $644 per share to briefly top a $600bn market capitalisation. At midday, the stock was down 0.3 per cent at $634.51.

“The bar has been set low for the earnings season so I think earnings will be a catalyst for the market to move higher. The recent decline is just digesting the uninterrupted rally we’ve had,” said JJ Kinahan, chief derivatives strategist for TD Ameritrade in Chicago .

The Standard & Poor’s 500 Index is still up 8.5 per cent so far this year – compared with its gain of 12 per cent at the end of the first quarter.

But the benchmark index has fallen 2.6 per cent in the past four sessions as investors questioned the economy’s strength and the US Federal Reserve’s resolve to keep the easy money flooding into the market.

Some analysts view the pullback as a buying opportunity, while others see it as the start of a long-awaited correction.

Friday’s soft US payrolls report added to the US stock market’s recent losses that were sparked by last Tuesday’s minutes from the Fed’s March policy meeting. The Fed’s minutes were interpreted as showing the central bank was less than keen to launch more stimuli.

A Reuters poll on Monday showed most major Wall Street banks expect anemic growth in the US job market and a struggling economic recovery to force the Fed to undertake another round of monetary stimulus.

Supervalu Incorporation shares jumped 10.2 per cent to $5.86 after the third-largest US supermarket operator reported better-than-expected earnings and issued a full-year profit forecast above Wall Street’s view.

Best Buy shares hit their lowest since December 2008 and were at their session low after Chief Executive Brian Dunn resigned after 28 years with the world’s largest consumer electronics retail chain. The stock was down 4.3 per cent at $21.67, after earlier dropping to a session low at $21.62.

Dow component Alcoa Incorporation, a bellwether for the industrial sector, will kick off the quarterly earnings season after the closing bell when it releases its results. Alcoa’s stock slipped 2.1 per cent to $9.40 in midday trading.

Source: Punch