Tech And Financial Sectors Drag Down Us Markets
Following the biggest drop for the S&P 500 in over two months yesterday, the US stock market has followed suit and dropped in a volatile session today as technology shares extended losses while JPMorgan Chase slid on disappointing earnings reported.
By Paolo Palazzi-Xirinachs
Friday, April 11, 2014 - 00:00
JPMorgan lost 2.9% as profit fell 19% on lower fixed-income trading and mortgage revenue. Micron Technology Inc., Broadcom Corp. and Teradata Corp. lost more than 2% as technology shares paced declines in the market after tumbling the most since 2012 yesterday. The S&P 500 fell to 1,822.31 at 1:30PM EDT in New York. The index has slipped 2% this week, poised for the biggest loss since January. The Nasdaq dropped 0.7%, after briefly erasing an early loss, while the Dow slid 116.95 points, or 0.7%, to 16,053.27. JPMorgan lost 2.9% as profit fell 19% on lower fixed-income trading and mortgage revenue. Micron Technology Inc., Broadcom Corp. and Teradata Corp. lost more than 2% as technology shares paced declines in the market after tumbling the most since 2012 yesterday.
The selloff that began last week was seemingly sparked by growing concern that valuations may be too high as earnings season begins. The Nasdaq trades at 35 times reported earnings of the companies in the index. That’s double the ratio for the S&P 500, which trades at about 17 times earnings. Profit for members of the S&P 500 probably fell 0.9% in the first quarter, analysts now forecast, after anticipating a 6.6% rise in January. Sales increased 2.6%, according to projections. Analysts have reduced earnings estimates more than they usually do over the last three months. Average profit forecasts for S&P 500 companies have fallen about 4% in the first quarter, a percentage point more than normal, according to a report issued by Bloomberg today.
Equities have been volatile this week, with Thursday's move a sharp reversal from gains Wednesday after minutes from the latest Federal Reserve policymakers' meeting suggested members were more likely to keep rates low than previously expected. Even with the recent declines, investors appear committed to equities. Investors in US-based funds poured $8.9 billion into stock funds in the week ended April 9, data from Thomson Reuters' Lipper service showed on Thursday.
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