TMCnet News
Stocks slide on tech earnings, European debt woes(Associated Press Via Acquire Media NewsEdge) If weak financial results from big tech companies are sign of what's to come, stock indexes are in for a tough summer. Stocks fell Friday as poor earnings reports from technology companies suggested that the upcoming earnings season could show that companies invested less in new technology as the economic recovery slowed. Fears of a spreading European debt crisis also weighed on the markets. Italian bank shares plunged and trading of some was halted after Moody's warned that it might downgrade their credit ratings. "I think it spooked a lot of people," said Frederick Rizzo, who analyzes European banks for T. Rowe Price, adding that the move by Moody's was expected. "The markets are really emotional right now." The decline erased all of this week's gains for the Dow Jones industrial average. Blue chips are on track for their seventh weekly loss in the last eight weeks. Micron Technology Inc. fell 12 percent after the company said lower sales of computer chips hurt its earnings, which were far less than analysts had expected. Oracle Corp. fell 4 percent after its sales of computer hardware fell sharply. Technology stocks were broadly lower. Micron had the biggest loss of any stock in the Standard & Poor's 500 index. Cisco Systems Inc. fell 2 percent, and Microsoft Corp. lost more than 1 percent. SanDisk Corp. fell 5 percent. Technology companies can be an indicator of other companies' health. Lower sales could be a sign that the weak economy has kept companies from buying new computers, software and other equipment in the second quarter. A series of poor reports on the economy have already weakened investors' expectations for the next round of earnings reports from big U.S. companies, which begins in July. "No one is expecting good news, but if it's worse than expectations, this is really a very shaky market," said Uri Landesman, president of Platinum Partners, a hedge fund. Landesman expects that the Standard & Poor's 500 index will fall to 1,200 this summer as more companies report second-quarter earnings next month. The last time the S&P 500 crossed that threshold was in December 2010. The Dow Jones industrial average fell 83 points, or 0.7 percent, to 11,966 in morning trading. The S&P 500 fell 10, or 0.8 percent, to 1,273. The Nasdaq composite fell 21, or 0.8 percent, to 2,666. Stocks fell despite the fact that the government said the economy grew at a 1.9 percent annual rate in the first quarter, slightly higher than an earlier estimate of 1.8 percent. The figure still indicated very slow growth for a post-recession recovery. Economists expect little improvement in the second quarter, which ends next week. Still, another government report showed that businesses ordered more machinery, equipment and airplanes in May than in April. Orders of such durable goods increased by 1.9 percent in May after a sharp decline in April. The U.S. economy has cooled since late April, pulling the stock market down in six of the past seven weeks. Recent reports on housing, employment, manufacturing and retail sales all have been weak. The debt crisis in Greece and fears that China's growth is slowing have also pushed markets lower. The Dow is on track for another week of losses. The S&P 500 is flat for the week, while the Nasdaq is up 1.7 percent since last Friday's close. Drug company Pfizer Inc. dropped 2 percent after the government rejected its application to sell a new pain drug. Newell Rubbermaid Inc. rose 2 percent after the company late Thursday named Unilever executive Michael Polk CEO. Polk has been on Newell's board of directors since 2009. Analysts applauded the choice. (c) 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. |