NEW YORK, N.Y. – U.S. stocks fell Friday as health care and technology companies continued to report weak first-quarter results, but thanks to some late buying, they managed to avoid major losses.
Stocks opened lower and fell further throughout the morning, extending a downturn from the day before. That followed a rout in European indexes. Late in the day bond prices rose again, sending yields lower and pushing investors to buy utility and phone company stocks.
Dan Suzuki, senior U.S. equities strategist at Bank of America, said investors don’t like what they’re seeing in the results from technology companies.
“A lot of investors have been disappointed by results from tech this earnings season,” he said. So they are turning to bond-like stocks such as phone and utility companies, as well as small- and mid-cap stocks, which struggled in 2015.
“Everything that was working through last year has been an underperformer this year, and vice versa,” he said.
The Dow Jones industrial average gave up 57.12 points, or 0.3 per cent, to 17,773.64. It was down as much as 178 points earlier in the day. The Standard & Poor’s 500 index fell 10.51 points, or 0.5 per cent, to 2,065.30. The Nasdaq composite index lost 29.93 points, or 0.6 per cent, to 4,775.36. That was its seventh decline in a row.
Health care companies took the biggest losses after a bout of weak earnings reports. Biotech drugmaker Gilead Sciences said its results were hurt by big discounts and rebates on its costly hepatitis C medicines, and its stock lost $8.79, or 9.1 per cent, to $88.21. Rival biotech giant Amgen reported relatively solid results, but fell $2.26, or 1.4 per cent, to $158.30.
Health insurer Molina Healthcare slashed its full-year guidance because of higher medical care costs in Ohio and Texas, expenses related to recent acquisitions, and pharmacy costs, especially in Puerto Rico. It plunged $12.46, or 19.4 per cent, to $51.76.
Molecular diagnostics company Cepheid shed $6.86, or 19.4 per cent, to $28.54 as analysts were disappointed with its revenue projections for the second quarter.
Tech stocks continued to slide. After its profit fell short of estimates, electronic storage company Seagate Technology lost $5.13, or 19.1 per cent, to $21.77. Hard drive maker Western Digital dropped $5.19, or 11.3 per cent, to $40.87. Apple, which is in a deep two-week slide, fell another $1.09, or 1.1 per cent, to $93.75. Like the Nasdaq, Apple has fallen for seven days in a row.
Bond prices rose slightly, and yields continue to slip. The yield on the 10-year U.S. Treasury note fell to 1.82 per cent from 1.83 per cent. Utility companies made the biggest gains, as NextEra Energy added $1.11, or 1 per cent, to $117.58.
While earnings hurt tech and health care companies, better results at consumer companies sent those stocks higher. E-commerce giant Amazon said its revenue jumped 28 per cent in the first quarter, and the company turned a far bigger profit than analysts expected. Cloud-based Amazon Web Services performed well. Amazon rose $57.59, or 9.6 per cent, to $656.59.
Consumer products maker Newell Brands gave a strong outlook for the year after its reported solid results in the first quarter, and its stock rose $2.12, or 4.9 per cent, to $45.54. Online travel company Expedia reported a bigger adjusted profit and greater sales than expected, and its stock added $8.86, or 8.3 per cent, to $115.77.
Digital TV listing company Rovi said it will buy digital video recording company TiVo for about $1.1 billion in cash and stock. TiVo gained 56 cents, or 5.9 per cent, to $9.98 and Rovi rose 27 cents, or 1.6 per cent, to $17.62.
Stocks in Europe took big losses. Official data showed the eurozone economy rose by a surprising 0.6 per cent in the first quarter, but investors were concerned that inflation slipped in April. France’s CAC 40 fell 2.8 per cent and Germany’s DAX lost 2.7 per cent. Britain’s FTSE 100 shed 1.3 per cent.
The yen continued to gain strength, as it has done over the last few months. It jumped Thursday after the Bank of Japan held off on implementing any new economic stimulus measures. On Friday the dollar fell to 106.73 yen from 108.09 yen. Japanese markets were closed for a holiday Friday. In Hong Kong, the Hang Seng index fell 1.5 per cent and Seoul’s Kospi gave up 0.3 per cent.
Metals prices continued to rise. Gold advanced $24.10, or 1.9 per cent, to $1,290.50 an ounce and silver rose 23 cents, or 1.3 per cent, to $17.82 an ounce. Gold is trading at 15-month highs. Copper picked up 5 cents, or 2.3 per cent, to $2.28 a pound.
Benchmark U.S. crude lost 11 cents to $45.92 a barrel in New York. Brent crude, used to price international oils, fell 1 cent to $48.13 a barrel in London.
In other energy trading, wholesale gasoline lost 1 cent to $1.58 a gallon. Heating oil fell 3 cents, or 1.9 per cent, to $1.38 a gallon. Natural gas rose 10 cents, or 4.8 per cent, to $2.18 per 1,000 cubic feet.
The euro rose to $1.1454 from $1.1351.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at http://bigstory.ap.org/journalist/marley-jay