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Tech shares fall on weakness, NetApp down late

Tech shares fall on weakness, NetApp down late
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First Published: Thu, Aug 18 2011. 09 03 AM IST
Updated: Thu, Aug 18 2011. 09 03 AM IST
New York: Tech shares fell on Wednesday after Dell’s disappointing sales outlook fanned worries weak economic growth will hurt earnings in the third quarter.
The Dow and S&P indices ended little changed in an up-and-down session where investors sold growth sectors in favor of defensive shares like telecoms and utilities.
Computer maker Dell was the S&P’s worst performer, losing 10% to $14.20 after cautious comments on spending on technology by the government sector.
Hewlett-Packard was also hit, falling 3.7% to $31.39 and weighing on the Dow as investors also worried business spending could decline in coming quarters.
“You don’t usually see tech down so sharply while the rest of the market is down less, which shows that the latest earnings have created a lot of concerns,” said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.
In after-hours action by tech companies, NetApp Inc slumped 14.5% to $35.60 after its revenue missed expectations while JDS Uniphase lost 3.2% to $11.32 following a weak first-quarter outlook.
Retailers slipped following a weak report from Abercrombie & Fitch, despite good news from Target. With 94% of S&P companies reporting earnings, 72% have beaten expectations.
The Dow Jones industrial average was up 4.28 points, or 0.04%, at 11,410.21. The Standard & Poor’s 500 Index was up 1.12 points, or 0.09%, at 1,193.88. The Nasdaq Composite Index was down 11.97 points, or 0.47%, at 2,511.48.
Concerns that the US economy may be headed for another recession and that Europe may be unable to stem its financial troubles have hit the market, with a strong earnings season one of the few bright spots for traders, though they often have not been enough to offset macroeconomic woes.
“So with technology concerns, and then more than our fair share of recession concerns and continued concerns about Europe, we’re in a real ‘three strikes, you’re out´ situation today with no reason to buy,” Colas said.
Both Abercrombie & Fitch and Deere & Co slumped on disappointing margins news. Abercrombie also raised concerns about the consumer response to higher prices going into the crucial back-to-school shopping season.
Abercrombie dropped 8.7% to $64.87 while Deere lost 1.2% to $74.26 and was one of the biggest drags on industrial shares. The S&P retail index fell 0.6%.
On the upside, Target Corp rose 2.4% to $50.55 after its profit and forecast topped expectations.
Stocks started the day with solid gains but turned lower by midday. Declining stocks outnumbered advancers on the Nasdaq by about seven to six. On the New York Stock Exchange, three stocks rose for every two that fell.
The day’s moves were reminiscent of the sharp downward swings last week after Standard & Poor’s downgrade of the United States’ top-tier credit rating on Aug. 5. The top two S&P sectors were telecom, up 1.6%, and utilities, up 0.8%. Both groups are considered defensive strategies.
Trading volume slowed from last week to 7.24 billion on Wednesday, down from the daily average of approximately 16 billion shares traded last week.
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First Published: Thu, Aug 18 2011. 09 03 AM IST
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