Banks, tech send Wall Street to worst drop in 2 months

By @ibtimes on

The S&P 500 suffered its biggest decline in nearly two months on Wednesday as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally.

The Nasdaq fell more than 1 percent, its biggest daily percentage loss since November 16, as more disappointment in earnings came from chipmaker Cree Inc . Its stock tumbled 14.5 percent to $53.63.

After the close, F5 Networks Inc shares plummeted 20.7 percent to $110.08 after the network equipment maker posted a weaker-than-expected quarterly revenue and forecast second-quarter revenue below Wall Street's estimates. The stock has been one of the big momentum plays during the past year and could serve to extend the sell-off on Thursday.

Financial and technology stocks have been driving the surge that has pushed the benchmark index up nearly 10 percent since the start of December, which some investors believe has stocks primed for a pullback.

Even stocks here that are beating expectations are not acting favorably so (for) the market, it may be time for a pause, and that may be what we are seeing here. said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

A prime example was Apple Inc , which slipped 0.5 percent to $338.84 after the company reported a quarterly profit that blew past Wall Street's expectations on strong sales of iPhones, iPads and Mac computers.

Goldman Sachs Group Inc's stock fell 4.7 percent to $166.49, its biggest daily percentage decline since April 30, after the Wall Street firm posted a 53 percent drop in profit as trading revenue tumbled. Shares of Wells Fargo & Co lost 2 percent to $31.81 after the company posted a fourth-quarter profit that missed some analysts' estimates.

You are having a lot of people coming into this sector over the last couple of weeks for more longer-range investment planning. You've got some people that came into the trade behind them that now see their short-term trade isn't going to work, Mendelsohn said.

Optimism about financial-sector earnings increased after JPMorgan Chase's results on Friday beat targets.

The Dow's loss was limited by International Business Machines Corp , which climbed 3.4 percent to $155.69 on strong earnings after the close on Tuesday.

The Dow Jones industrial average <.DJI> fell 12.64 points, or 0.11 percent, to 11,825.29. The Standard & Poor's 500 Index <.SPX> lost 13.10 points, or 1.01 percent, to 1,281.92. The Nasdaq Composite Index <.IXIC> dropped 40.49 points, or 1.46 percent, to 2,725.36.

CROSSING THE RUBICON

Shares of Cree and its rival LED lighting makers fell after it reported weaker-than-expected sales, profit and a current quarter outlook late on Tuesday.

The PHLX semiconductor index <.SOX> also dropped 2.4 percent, its worst percentage decline since August 30.

Rubicon Technology Inc slumped 7.7 percent to $$20.75 and circuit maker Linear Technology Corp fell 4.4 percent to $34.56.

American Express Co lost 2.4 percent at $45.24 after it said restructuring charges would reduce fourth-quarter earnings.

Volume was slightly below average with about 8.35 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, just short of last year's estimated daily average of 8.47 billion.

Declining stocks far outnumbered advancing ones on the NYSE by a ratio of more than 3 to 1, while on the Nasdaq, nearly five stocks fell for every one that rose.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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