Tech stocks weigh on Wall Street after weak Intel results
(Reuters) – U.S. stocks edged lower on Friday as technology shares were hit by Intel’s dour results, while investors assessed data that showed domestic growth was boosted by temporary factors in the first quarter.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 24, 2019. REUTERS/Brendan McDermid
The Commerce Department said gross domestic product increased at a 3.2 percent annualized rate, lifted by trade and the largest accumulation of unsold goods since 2015, factors that are likely to reverse in the coming quarters.
However, consumer and business spending slowed sharply, and investment in homebuilding contracted for a fifth straight quarter, giving the report a weak tone.
“Generally GDP was good, but if you look at personal consumption, it is probably telling the Fed to stay back right now because there is no real sign of inflation picking up right now,” said Tom Plumb, president of Plumb Funds in Madison, Wisconsin.
“The markets are still looking for opportunities, though it continues to be cautious because there are a lot of people thinking the economy is going to roll over and we’re near all-time highs.”
The S&P 500 is now about 0.5% away from its record high hit in late September, boosted by hopes of a U.S.-China trade resolution, a dovish Federal Reserve and a largely positive first-quarter earnings season.
Nearly 78% of the 178 S&P 500 companies that have reported earnings so far have surpassed estimates, according to Refinitiv data.
Analysts now expect earnings to decline 0.3% from a year earlier, a big improvement from the 2.3% fall forecast at the start of April.
Intel Corp slumped 9.9% after it cut its full-year revenue forecast and missed quarterly sales estimate for its key data center business.
Its results hit other chipmakers. The Philadelphia chip index tumbled 1.65%, while the broader technology sector fell 0.82%.
Offering support to markets was Walt Disney Co, which rose 1.5% after Marvel Studios superhero spectacle “Avengers: Endgame” hauled in a record $60 million at U.S. and Canadian box offices during its Thursday night debut.
Their shares drove a 0.25% gain in the consumer discretionary sector.
At 10:58 a.m. ET the Dow Jones Industrial Average was down 17.60 points, or 0.07%, at 26,444.48, the S&P 500 was down 0.47 points, or 0.02%, at 2,925.70 and the Nasdaq Composite was down 21.01 points, or 0.26%, at 8,097.67.
The energy sector fell 1.90%, the most among the three S&P sectors in the red, weighed down by lower crude prices and Exxon Mobil Corp’s downbeat results.
Exxon declined 2.9% after its quarterly profit missed estimates on lower oil and gas prices and weakness across its businesses.
Ford Motor Co surged 10.3% and was the biggest gainer on the S&P after the automaker posted better-than-expected quarterly earnings largely due to strong pickup truck sales in its core U.S. market.
Amazon.com Inc rose 0.6% after the e-commerce giant reported quarterly profit that doubled and beat estimates on soaring demand for its cloud and ad services.
Mattel Inc jumped 7.7% after the toymaker beat analysts’ estimates for quarterly revenue, as a more diverse range of Barbie dolls powered sales in the United States.
Advancing issues outnumbered decliners by a 1.65-to-1 ratio on the NYSE and by a 1.32-to-1 ratio on the Nasdaq.
The S&P index recorded 23 new 52-week highs and two new lows, while the Nasdaq recorded 40 new highs and 27 new lows.
Reporting by Sruthi Shankar and Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva and Shounak Dasgupta