NEW YORK-The S&P 500 suffered its biggest decline in nearly two months yesterday as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally. The Nasdaq fell more than one per cent, its biggest daily percentage loss since November 16, as more disappointment in earnings came from chipmaker Cree Inc. Its stock tumbled 14.5 per cent to US$53.63. After the close, F5 Networks Inc shares plummeted 20.7 per cent to US$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 today.
Financial and technology stocks have been driving the surge that has pushed the benchmark index up nearly ten per cent 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 favourably 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 per cent to US$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 per cent to US$166.49, its biggest daily percentage decline since April 30, after the Wall Street firm posted a 53 per cent drop in profit as trading revenue tumbled. Shares of Wells Fargo & Co lost two per cent to US$31.81 after the company posted a fourth-quarter profit that missed some analysts' estimates. 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 per cent to US$155.69 on strong earnings after the close on Tuesday. The Dow Jones industrial average fell 12.64 points, or 0.11 per cent, to 11,825.29. The Standard & Poor's 500 Index lost 13.10 points, or 1.01 per cent, to 1,281.92. The Nasdaq Composite Index dropped 40.49 points, or 1.46 per cent, to 2,725.36. (Reuters)