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
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
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
The Dow's loss was limited by International Business Machines Corp
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
American Express Co
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 2,319 to 673, while on the Nasdaq, decliners beat advancers 2,218 to 460.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)