Disappointing earnings reports from Intel and IBM weighed on Wall Street, as did fresh signs from Europe that taming the sovereign debt crisis remains a challenge.
IBM’s sales fell short of expectations, as did the gross margin Intel predicted.
“Profits are lukewarm,” Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, told Bloomberg News. “You get disappointments from some bellwether technology companies at a time when the market has had such a good run. We’re not bearish, but if we’re going to add to positions, we need a pullback.”
In afternoon trading in New York, the Dow Jones Industrial Average fell 0.61 percent, the Standard & Poor's 500 Index declined 0.33 percent and the Nasdaq Composite Index dropped 0.39 percent.
So far first-quarter earnings have been positive. Twenty-two companies in the S&P 500 are expected to report results today, according to Thomson Reuters data, with American Express and eBay due after the close.
Pacing declines on Wall Street was a drop in Chesapeake Energy shares, which plunged 7 percent and was the most actively traded stock on the New York Stock Exchange, after a Reuters report that CEO Aubrey McClendon did not disclose loans of as much as US$1.1 billion over the last three years against his stake in thousands of the company's oil and natural gas wells.
Shares of Berkshire Hathaway fell 1.4 percent after Warren Buffett said he has stage 1 prostate cancer. His condition "is not remotely life-threatening or even debilitating in any meaningful way," Buffett said in a statement, adding that he is set to start a two-month treatment consisting of daily radiation treatments beginning in mid-July.
Meanwhile, Goldman Sachs recommended investors buy Apple shares, which fell as much as 8.8 percent in the past week, amid a “very big year” for the world’s biggest company by market value, according to Bloomberg.
In Europe, the Stoxx 600 Index shed 0.7 percent.
The euro zone's sovereign debt crisis remains the key concern as Italian Prime Minister Mario Monti warned that the nation won't meet its balanced-budget goal by 2013 because of a deeper-than-expected contraction of the economy, while the Bank of Spain said the country’s bad loans ratio climbed.
Oil declined, sending crude for May delivery down as much as 1.9 percent, after the US energy department data showed inventories rose 3.86 million barrels last week. That was more than double the increase forecast in a Bloomberg survey of analysts.
(BusinessDesk)
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