New York: US stocks slid on Thursday, after Microsoft’s proposed job cuts and disappointing earnings shook investors, while economic data showed further deterioration in the labour and housing markets.
Microsoft Corp’s stock fell nearly 12% at one point in the session to its lowest level since 1998 and was among the top drags on both the Dow and Nasdaq, after the world’s largest software maker said it would cut up to 5% of its estimated work force over the next 18 months.
The company cautioned that it could no longer offer profit forecasts for the rest of the fiscal year after posting a quarterly profit that fell short of expectations. The tech bellwether shook up Wall Street by releasing its earnings before the opening bell, instead of after the close as expected.
Wall Street briefly pared losses late in the session after comments from the White House that it is committed to moving as quickly as possible on a stimulus package and that President Barack Obama’s administration will do everything possible to restore growth and normalize the markets.
The Dow Jones industrial average fell 105.30 points, or 1.28%, to 8,122.80. The Standard & Poor’s 500 Index dropped 12.74 points, or 1.52%, to 827.50. The Nasdaq Composite Index slumped 41.58 points, or 2.76%, to 1,465.49.
The Dow is down 7.5% for the month and down 34.4% from 52 weeks ago.
Microsoft traded as low as $17.07, the lowest price since January 1998, and its largest percentage drop since November 2000. Microsoft ended Nasdaq trading down 11.7% at $17.11.
Google’s strength, AMD’S loss
In a positive sign for tech stocks, Google Inc posted strong fourth-quarter earnings after the close on Thursday, beating Wall Street’s forecasts.
Google’s stock climbed 2.8% to $315.18 in extended trade from a Nasdaq close at $306.50.
However, the strong earnings from Google were countered by results from Advanced Micro Devices , which reported a fourth-quarter loss after the closing bell and forecast decreased revenue in its first quarter.
AMD also said that Intel had requested a meeting related to a patent cross-licensing agreement.
Shares of AMD fell 5.9% to $1.90 in extended trade.
Jobs and housing picture darkens
The US economy showed further signs of deterioration on Thursday as initial weekly claims for jobless benefits rose to a seasonally adjusted 589,000, and housing starts sank 15.5% to a seasonally adjusted annual rate of 550,000 units - the lowest on record.
Adding to concerns in the financial sector, former Merrill Lynch & Co chief executive John Thain is leaving Bank of America Corp, which recently acquired Merrill, a Bank of America spokesman said. His departure, which is effective immediately, came less than a week after Bank of America took $20 billion of government capital to help absorb Merrill’s losses.
During the regular session, Bank of America’s stock stumbled 14.5% to $5.71 on the New York Stock Exchange.
Investors were not appeased by the Senate Finance Committee’s backing of Timothy Geithner, President Barack Obama’s nominee for US Treasury secretary. The panel’s approval cleared the way for a full Senate confirmation vote.
Geithner is widely expected to be confirmed by the Senate as one of Obama’s leading players on the team that will tackle the US recession.
In contrast to Microsoft, Apple Inc shares rose 6.7%, to $88.36 on Nasdaq a day after the iPhone maker reported stronger-than-expected earnings and gave a solid outlook for the current quarter, despite the weak economy.