The News Herald (Willoughby, OH)
Stocks fade and finish lower as tech companies fall again
After a day of trading, U.S. stocks fell for the seventh time in eight days Monday as technology companies continued to slide.
NEW YORK » After a wobbly day of trading, U.S. stocks fell for the seventh time in eight days Monday as technology companies continued to slide. Industrial and highdividend companies rose, and the market’s losses were limited relative to the steep losses it suffered last week.
Stocks opened lower and repeatedly switched between small gains and losses before falling in the last hour of trading. Along with technology companies, health care and energy stocks and retailers also fell as the companies that have led the U.S. market higher this year continued to struggle.
Defense contractors L3 and Harris made the biggest gains on the S&P 500 after announcing a deal to combine. Smaller companies fared better than the rest of the market and finished broadly higher.
Jason Pride, chief investment officer for private clients at Glenmede, said that investors expect many years of powerful profit growth from technology-oriented companies like Apple, Amazon and Netflix. Over the last two weeks, Wall Street has started considering the possibility that interest rates will rise more quickly, taking a bigger chunk out of those critical future profits.
“The more the company’s valuation is dependent on some profit way ahead in time as opposed to the profits coming today, the more rate hikes should impact the valuation of that company,” he said. Pride said the recent downturn is a healthy development for stocks.
“A five to 10 percent pullback of that magnitude is very normal and very reasonable for this market to go through,” he said.
The S&P 500 index lost 16.34 points, or 0.6 percent, to 2,750.79. The Dow Jones Industrial Average retreated 89.44 points, or 0.4 percent, to 25,250.55. The Nasdaq composite skidded 66.15 points, or 0.9 percent, to 7,430.74. The Russell 2000 index of smaller-company stocks added 6.42 points, or 0.4 percent, to 1,553.09.
The S&P 500 lost 4.1 percent last week, its third weekly loss in a row and its biggest since late March, as investors worried about rising interest rates and trade tensions between the U.S. and China.
The technology companies that have led the market higher in recent years, including some of the world’s most valuable companies, continued to decline. Apple gave up 2.1 percent to $217.36 and chipmaker Nvidia slipped 3.4 percent to $235.38.
Netflix, which is scheduled to report its third-quarter results late Tuesday, fell 1.9 percent to $333.13. It’s fallen 20.5 percent since disclosing weak user growth three months ago.
Harris and L3 are combining to form L3 Harris Technologies, which will have annual sales of about $16 billion. That would make it the sixth-largest U.S. defense contractor and one of the top 10 globally. L3 gained 12.8 percent to $220.91 and Harris rose 11.9 percent to $173.25.
Bank of America’s third-quarter profit and revenue were better than analysts expected, but Wall Street was disappointed with the company’s loan growth. The company has emphasized responsible growth recently, and like other banks, it’s benefiting from last year’s corporate tax cut and rising interest rates. Its stock slipped 1.9 percent to $27.92.
Bond prices edged lower. The yield on the 10-year Treasury note rose to 3.16 percent from 3.14 percent late Friday.