BLBG: Most U.S. Stocks Fall As Technology Slump Tempers Europe
Most U.S. stocks fell, giving the Standard & Poor’s 500 Index its longest slump since May, as concern about technology earnings overshadowed optimism with European officials’ steps to protect Spanish banks.
Advanced Micro Devices Inc. (AMD), the second-biggest maker of processors for personal computers, tumbled 11 percent after reporting an unexpected decline in sales. Applied Materials Inc. (AMAT) slumped 1.8 percent after cutting its forecasts. Utility, consumer staples and telephone shares in the S&P 500 advanced.
About four shares fell for every three that rose on U.S. exchanges at 11:46 a.m. New York time. The S&P 500 slid 0.1 percent to 1,350.54. The index has lost 1.7 percent over four days. The Dow Jones Industrial Average added 15.59 points, or 0.1 percent, to 12,751.88. Trading in S&P 500 companies was 5.6 percent below the 30-day average at this time of day.
“The news out of Europe is another step in the right direction, but there’s a long way to go there” said John Canally, an economist and investment strategist at LPL Financial Corp. in Boston. The firm oversees about $330 billion. “Then there’s the earnings season here. As always, the forecast matters a lot more than what actually happened.”
Chipmakers in the S&P 500 tumbled 1.6 percent amid concern that weaker technology demand will weigh on corporate earnings. Profits for S&P 500 companies fell 1.8 percent in the second quarter, according to analyst estimates compiled by Bloomberg. That would be the first drop since 2009.
Equities advanced earlier today as European governments will jump-start as much as 100 billion euros ($123 billion) in emergency loans to shore up Spain’s banks and may move the costs off the Spanish government’s balance sheet to shield the euro region’s fourth-largest economy from the debt crisis.
Earnings Estimates
Reluctance among U.S. companies to push earnings estimates higher in the second quarter indicated the period’s results may be disappointing, according to Pierre Lapointe, Brockhouse & Cooper Inc.’s global macro strategist.
Only 19 companies made profit projections last month that beat analysts’ average estimate, according to data compiled by Bloomberg and summarized by Brockhouse in a July 5 report. The total was the lowest for any June since the figures were first compiled in 2000 and the second-lowest for any month after the 14 last September.
“Investors did not get many indications from companies on the strength of earnings,” Lapointe, who is based in Montreal, wrote with colleagues Alex Bellefleur and Frances Donald. “The risk is that we will get more earnings misses than usual.”
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
