Tech stocks weigh on Wall Street
NEW YORK — Two of the three major U.S. stock indexes pulled back from their record highs Thursday after an afternoon swoon for technology companies.
The Standard & Poor’s 500 index fell 2.41 points, or 0.1 percent, from its record set on Wednesday 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 alltime 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 $3.55, or 10.2 percent, to $31.10. It began to plunge around noon, after 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 $9.18, or 7.2 percent, to $119.02.
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 but so is revenue 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.
Health care stocks were 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 $5.06, or 14.9 percent, to $28.88.
Shares of industrial companies struggled, and Johnson Controls tumbled $3.18, or 7.3 percent, to $40.14. It reported weaker-than-expected revenue for the latest quarter and trimmed the upper end of the range for its forecast for fullyear earnings per share.
Facebook shares climbed $4.83, or 2.9 percent, to $170.44 after it reported stronger-thanexpected 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 $49.04 Thursday. Brent crude, the international standard, gained 52 cents to $51.49 a barrel.