Tech firms fall as Dow climbs to new record
U.S. stock indexes mostly pulled back from their record highs Thursday after a swoon for technology firms helped overshadow another big day for telecoms.
The Standard & Poor’s 500 index and Nasdaq composite fell, but the Dow Jones industrial average rose to a new all-time high.
Stocks had been on track for another quiet day of gains, but Apple, Microsoft and other tech stocks suddenly changed direction. Tech stocks in the S&P 500 finished the day down 0.8%. 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, falling 10.2% to $31.10. It began to plunge 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 fell 7.2% to $119.02 after it reported weaker revenue for the latest quarter than expected and gave a forecast for earnings this quarter that fell short of some analysts’ forecasts.
About half the companies in the S&P 500 have reported their earnings for the latest quarter, and the results have been mostly encouraging. For many companies, not only did profits grow, but so did revenues.
Expectations were high coming into the reporting season, and shares rallied accordingly. Now, stocks are getting less of a boost than usual when the firms report earnings that beat 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. Stocks are dropping more than usual when firms fall short of expectations, he said.
Healthcare stocks were weak. AstraZeneca’s U.S.listed shares sank 14.9% to $28.88 after the drugmaker said its lung cancer drug Imfinzi did not reach its goals in a clinical trial.
Industrial companies also struggled. Johnson Controls tumbled 7.3% to $40.14 after it reported quarterly revenue that fell short of expectations and trimmed the upper end of the range for its forecast for full-year earnings per share.
Telecom stocks rallied for a second straight day. Verizon Communications went up 7.7% to $47.81 — its best day in more than eight years — after it reported more revenue than expected.
Verizon’s big day follows AT&T’s, which had its biggest move since 2009 on Wednesday after it reported stronger earnings than expected. Over the last two days, AT&T has climbed 8.8%, and Verizon is up 8.7%.
Facebook rose 2.9% to $170.44 after its strong report late Wednesday.
Benchmark U.S. crude rose 29 cents to $49.04 a barrel. Brent crude rose 52 cents to $51.49 a barrel. Natural gas rose 5 cents to $2.97 per 1,000 cubic feet. Heating oil rose nearly 1 cent to $1.60 a gallon. Wholesale gasoline rose 3 cents to $1.64 a gallon.
Gold rose $10.60 to $1,260 an ounce. Silver rose 11 cents to $16.57 an ounce. Copper rose nearly 1 cent to $2.88 a pound.
The yield on the 10-year Treasury rose to 2.32% from 2.28%. The two-year yield inched up to 1.36% from 1.35%, and the 30-year yield climbed to 2.94% from 2.89%.
The dollar fell to 111.09 yen from 111.30 yen. The euro fell to $1.1681 from $1.1725.