Poor tech earnings data pulls Wall Street lower

US REPORT: Dow Jones:11,822.80 (–2.49) S&P 500:1,280.26 (–1.66) Nasdaq:2,704.29 (–21.07)

STOCKS FELL yesterday as lacklustre technology and mater-ials earnings failed to live up to heightened expectations, threatening to short-circuit a seven-week run.

Morgan Stanley posted stronger-than-expected revenue to help lift the banking sector, shares rose 4.6 per cent to $29.02.

But F5 Networks plunged 21.4 per cent to $109.15 and pulled the Nasdaq lower after the network equipment maker forecast weak second-quarter revenue.

“The tug of war continued during the course of the day with techs and financials – the two big behemoths in terms of bellwethers for the market – slugging it out all day,” said Joseph Benanti, managing director of Rosenblatt Securities in New York.

“We had a lot of movement on hot news that will subside. Cloud stocks are important, but they are not going to drive all technology. And the financials are a bigger sector to follow and are starting to hold their own,” he said.

Freeport-McMoRan Copper Gold lost 3.7 per cent to $110.90 after the copper producer trimmed its sales forecast and said costs would rise. Natural resources stocks also came under pressure after data showing high growth in China stoked fears the country may need to tighten credit in order to check inflation.

The Dow Jones industrial average dipped 2.49 points, or 0.02 per cent, to 11,822.80.

The S&P’s 500 Index fell 1.66 points, or 0.13 per cent, to 1,280.26.

The Nasdaq Composite Index lost 21.07 points, or 0.77 per cent, to 2,704.29.

Underscoring how overbought the market has become in recent weeks, stocks failed to react to positive jobs and housing market data that pointed to a strengthening recovery.

Alcoa shed 0.5 per cent to $15.98, while Exxon Mobil slipped 0.6 per cent to $77.75.

In another example of how investors reacted to the market’s elevated earnings expectations, Parker Hannifin shares fell 6.1 per cent to $85.51. The company, which makes industrial control systems, beat earnings forecasts, but the stock slid as investors faulted the size of the beat.

The latest data indicated that two weak spots in the US economy – housing and jobs – appear to be on the mend. – (Reuters)