Stocks sink, extend losses on worries about earnings

— -- The market lost more of its recent sizzle Tuesday as attention shifted from the month-long run-up in stocks to companies' upcoming profit reports.

Despite two days of selling, the benchmark S&P is still 21% above its March 9 bear market low. While there is optimism the stock market is already looking beyond upcoming bad news, investors acknowledge challenges remain. "We've had a good little run" in stock prices, says John Derrick of U.S. Global Investors. "But you have some uncertainty on earnings. There's some concern about that."

Clearly, investors will need to keep their faith as they digest news on:

•Corporate earnings. Earnings season kicked off with a whimper as aluminum giant Alcoa, the first member of the Dow industrials to report earnings, posted a loss of $497 million, underscoring how slow demand remains for industrial materials.

And it's expected to be a bleak quarter in general. Earnings are expected to fall 22.5% in the first quarter, the seventh-consecutive quarter of lower year-over-year earnings, S&P says.

•Dividends. Companies hoping to hang onto cash while credit remains tight are slashing their dividends. A record 367 of roughly 7,000 companies in the first quarter said they would cut or terminate dividends, S&P said Tuesday. Meanwhile, 53% fewer companies said they would increase their payouts. This is the first time since 1955 the number of dividend cuts exceeded the number of dividend increases, says S&P's Howard Silverblatt.

Also, dividend payments are down 16% for the first quarter, the largest fall since 1958. And dividend payments are expected to fall 18% in the second quarter and fall again in the third, Silverblatt says.