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Wall Street has worst drop in 2-month on banks, tech

Wall Street has worst drop in 2-month on banks, tech
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First Published: Thu, Jan 20 2011. 08 12 AM IST
Updated: Thu, Jan 20 2011. 08 12 AM IST
New York: The S&P 500 suffered its biggest decline in nearly two-month on Wednesday as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally.
The Nasdaq fell more than 1%, its biggest daily percentage loss since 16 November, as more disappointment in earnings came from chipmaker Cree Inc. Its stock tumbled 14.5% to $53.63.
Financial and technology stocks have been driving the surge that has pushed the benchmark index up nearly 10% 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 favorably 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% to $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% to $166.49, its biggest daily percentage decline since 30 April, after the Wall Street firm posted a 53% drop in profit as trading revenue tumbled. Shares of Wells Fargo & Co lost 2% to $31.81 after the company posted a fourth-quarter profit that missed some analysts’ estimates.
“You are having a lot of people coming into this sector over the last couple of weeks for more longer-range investment planning. You’ve got some people that came into the trade behind them that now see their short-term trade isn’t going to work,” Mendelsohn said.
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% to $155.69 on strong earnings after the close on Tuesday,
The Dow Jones industrial average fell 12.64 points, or 0.11%, to 11,825.29. The Standard & Poor’s 500 Index lost 13.10 points, or 1.01%, to 1,281.92. The Nasdaq Composite Index dropped 40.49 points, or 1.46%, to 2,725.36.
Crossing the rubicon
Shares of Cree and its rival LED lighting makers fell after it reported weaker-then-expected sales, profit and a current quarter outlook late on Tuesday.
The PHLX semiconductor index also dropped 2.4%, its worst percentage decline since 30 August.
Rubicon Technology Inc slumped 7.7% to $$20.75 and circuit maker Linear Technology Corp fell 4.4% to $34.56.
American Express Co lost 2.4% at $45.24 after it said restructuring charges would reduce fourth-quarter earnings.
Volume was slightly below average with about 8.35 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, just short of last year’s estimated daily average of 8.47 billion.
Declining stocks far outnumbered advancing ones on the NYSE by 2,319 to 673, while on the Nasdaq, decliners beat advancers 2,218 to 460.
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First Published: Thu, Jan 20 2011. 08 12 AM IST