Stocks post first loss of the week as tech companies drop
By ALEX VEIGA
AP Business Writer
Losses among technology and consumer products companies weighed on U.S. stocks Thursday, snapping a three-day winning streak for the market.
Banks bucked the trend, rising along with bond yields. Energy companies also eked out a slight gain, despite a late-afternoon downturn in oil prices. The broad market slide came as investors pored over the latest corporate quarterly results.
“The earnings were a little bit disappointing today and we’re just really seeing, especially within the tech sector, follow-through on some of the big names that have reported disappointing numbers in some key spaces,” said Lindsey Bell, an investment strategist at CFRA Research.
The S&P 500 index fell 15.51 points, or 0.6 percent, to 2,693.13. The Dow Jones industrial average slid 83.18 points, or 0.3 percent, to 24,664.89. The drop knocked the blue chip average slightly into the red for the year.
The Nasdaq composite lost 57.18 points, or 0.8 percent, to 7,238.06. The Russell 2000 index of smaller-company stocks gave up 9.74 points, or 0.6 percent, to 1,573.82.
The major indexes were headed lower from the get-go as investors looked over the latest corporate earnings. Disappointing results from Philip Morris International and Procter & Gamble helped pull the market lower early on.
Philip Morris disclosed weak quarterly sales and said sales of its iQos device in Japan were slower than expected. The stock was the biggest decliner in the S&P 500, sinking 15.6 percent to $85.64. That’s the tobacco company’s worst single-day loss of all time.
Procter & Gamble declined 3.3 percent to $74.95 despite posting results that topped Wall Street’s forecasts. The consumer products company reported a flat third-quarter profit and President and CEO David Taylor said the company is facing a challenging “macro environment” and that markets that it operates within are being transformed.
Technology stocks, still the biggest gainers this year, weighed on the market. Companies in the computer chip business were big decliners for the second day in a row. Lam Research, which makes chip-making equipment, led the slide, dropping 6.6 percent to $190.39.
Qualcomm slid 4.8 percent to $52.57 after the Chinese government said it still has concerns about the company’s deal to buy NXP Semiconductors. Qualcomm withdrew one proposal for the deal Monday and submitted another.
Financial analysts are forecasting the strongest growth in seven years for S&P 500 companies, partly because of a resurgent global economy, but also because of expectations that last year’s corporate tax cut will have on corporate balance sheets.
Roughly 10 percent of the companies in the S&P 500 have released quarterly results so far. And most have reported earnings and sales that beat financial analysts’ forecasts. But that hasn’t necessarily translated into gains for shareholders.
On average, the S&P 500 companies that have reported earnings and revenue that topped Wall Street’s expectations saw their share price decline 5 percent on the day they released their results, Bell said.
“A lot of people had high expectations for the first quarter, as far as earnings results go, but it wasn’t really reflected in stock prices, necessarily,” Bell said, noting that investors appear to be unimpressed by the forecasts that management teams are giving for coming quarters.
Some corporate report cards did impress investors.
American Express jumped 7.6 percent to $102.37 after the credit card issuer reported a big quarterly profit thanks to strong customer spending and a lower tax rate.
Rising bond yields helped push bank shares higher. When bond yields rise, they drive up interest rates on mortgages and other loans, which can translate into bigger profits for banks. Bank of New York Mellon gained 5.7 percent to $54.24.
The yield on the 10-year Treasury rose to 2.92 percent from 2.88 percent late Wednesday. That’s the highest level since February.
Benchmark U.S. crude gave up early gains, slipping 18 cents to settle at $68.29 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, added 30 cents to close at $73.78 per barrel in London.
Gold fell $4.70 to $1,348.80 an ounce. Silver slipped a penny to $17.24 an ounce. Copper dropped 3 cents to $3.13 a pound.
The dollar rose to 107.41 yen from 107.26 yen on Wednesday. The euro fell to $1.2337 from $1.2377.
Indexes in Europe closed mostly higher. Germany’s DAX slipped 0.2 percent, while France’s CAC 40 rose 0.2 percent. Britain’s FTSE 100 added 0.2 percent.
Major indexes in Asia finished higher. Japan’s benchmark Nikkei 225 index rose 0.6 percent and South Korea’s Kospi added 0.4 percent. Hong Kong’s Hang Seng jumped 1.3 percent. Australia’s S&P/ASX 200 gained 0.6 percent. Shares also rose in Taiwan and Southeast Asia.