Tech stocks weigh on Wall Street

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - STAN CHOE In­for­ma­tion for this ar­ti­cle was contributed by Elaine Kurten­bach and Mar­ley Jay of The As­so­ci­ated Press.

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.

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