Falling Tech Stocks Pull US Indexes Off Their Record Highs
Published July 27th, 2017
NEW YORK (AP) — U.S. stock indexes pulled back from their record highs Thursday after an afternoon swoon for technology companies helped overshadow another big day for telecoms.
The Standard & Poor's 500 index fell 2.41 points, or 0.1 percent, from its record set a day earlier to close at 2,475.42. The Nasdaq composite likewise fell from a record, down 40.56, or 0.6 percent, to 6,382.19. The Dow Jones industrial average was an exception, and it rose 85.54, or 0.4 percent, to 21,796.55 to set another all-time high.
Stocks had been on track for another quiet day of gains in a year full of them, but Apple, Microsoft and other technology stocks suddenly changed direction in the afternoon. After being up as much as 0.6 percent in morning trading, tech stocks in the S&P 500 finished the day down 0.8 percent. It was the worst performance among the 11 sectors that make up the index.
Software company CA had the biggest loss in the S&P 500 and fell .55, or 10.2 percent, to .10. It began to plunge around noon, following reports that merger talks between it and BMC Software have ended.
F5 Networks was another tech stock that helped lead the S&P 500 lower. It reported weaker revenue for the latest quarter than analysts expected and gave a forecast for earnings this quarter that fell short of some analysts' forecasts. Its stock lost .18, or 7.2 percent, to 9.02.
Close to half of the companies in the S&P 500 have reported their earnings for the latest quarter, and the results have been mostly encouraging. Not only are profits growing, so are revenues for many companies.
But expectations were high coming into the reporting season, and shares rallied accordingly. Now, companies' stocks are getting less of a boost than usual when they report earnings that are above analysts' forecasts, said Nate Thooft, senior portfolio manager at Manulife Asset Management.
"And for those few that are disappointing, they're getting penalized significantly," Thooft said. Stock prices are dropping more than usual when companies fall short of expectations, he said.
Twitter dropped .77, or 14.1 percent, to .84. It reported better-than-expected quarterly results, but it also said that its monthly average user base did not grow from the prior quarter.
Health care stocks were also weak, and drugmaker AstraZeneca sank after it said its lung cancer drug Imfinzi did not reach its goals in a clinical trial. U.S.-listed shares of AstraZeneca lost .06, or 14.9 percent, to .88.
Industrial companies also struggled, and Johnson Controls tumbled .18, or 7.3 percent, to .14. It reported weaker-than-expected revenue for the latest quarter and trimmed the upper end of the range for its forecast for full-year earnings per share.
On the opposite side were telecom stocks, which rallied for a second straight day. Verizon Communications had its best day in more than eight years after it reported more revenue than analysts expected. Many more customers added wireless phones than Wall Street had forecast. Verizon jumped .41, or 7.7 percent, to .81.
Verizon's big day follows AT&T's, which had its biggest move since 2009 on Wednesday after it reported stronger-than-expected earnings. Over the last two days, AT&T has climbed 8.8 percent, and Verizon is up 8.7 percent.
Facebook climbed .83, or 2.9 percent, to 0.44 after it reported stronger-than-expected earnings. Its advertising revenue rose by nearly half from a year earlier, and Wall Street was pleased with the company's spending forecasts.
Oil and gas prices rose, which helped energy stocks in the S&P 500 rise 1 percent. The price of oil has been on a strong run this week, hitting its highest level since May, and benchmark U.S. crude rose 29 cents to settle at .04 Thursday. Brent crude, the international standard, gained 52 cents to .49 a barrel.
Natural gas rose 5 cents to .97 per 1,000 cubic feet, heating oil gained nearly a penny to .60 per gallon and wholesale gasoline rose 3 cents to .64 per gallon.
Gold rose .60 to ,260.00 per ounce, silver gained 11 cents to .57 an ounce and copper rose nearly a penny to .88 a pound.
The yield on the 10-year Treasury rose to 2.32 percent from 2.28 percent late Wednesday. The two-year yield rose to 1.36 percent from 1.35 percent, and the 30-year yield climbed to 2.94 percent from 2.89 percent.
The dollar dipped to 111.09 Japanese yen from 111.30 yen late Wednesday. The euro dipped to .1681 from .1725, and the British pound fell to .3070 from .3100.
In overseas markets, France's CAC 40 dipped 0.1 percent, Germany's DAX fell 0.8 percent and the FTSE 100 in London dropped 0.1 percent. The Japanese Nikkei 225 index up 0.1 percent. Hong Kong's Hang Seng climbed 0.7 percent and the Kospi in South Korea added 0.4 percent.