NEW YORK (Reuters) – The main Wall Street indices fell on Friday, pulled down by losses at major technology companies from Intel and IBM following their quarterly results, as hopes for a full economic reopening in the coming months .
IBM Corp fell 9.83% and was the main obstacle to the Dow Jones Industrial Average, after losing quarterly revenue estimates, hampered by a rare drop in sales of its software unit.
Intel Corp fell 8.93% while post-profit comments from new CEO Pat Gelsinger suggested the lack of strong outsourcing adoption.
“The challenge for the (technology) industry at this point in the earnings season is how much of their earnings growth expectations have been pushed into 2020 and may not be available in 2021,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle.
However, losses in the technology sector were offset by gains from Microsoft Corp, Apple Inc and Facebook Inc, keeping falls in major US equity indices under control.
Shares in the energy, financial, industrial and consumer sectors, which are among the sectors with the best performance since the United States elections in November, fell further on Friday.
The S&P 500 and Nasdaq reduced some losses after the opening bell, as the data showed that US manufacturing activity surprisingly reached its highest level in more than 13 ½ years in early January, in contrast to a disappointing result in the data of the purchasing manager in Europe before.
At 2:18 pm ET, the Dow Jones Industrial Average fell 121.68 points, or 0.39%, to 31,054.33, the S&P 500 lost 9.35 points, or 0.24%, to 3,843.72 and the Nasdaq Composite fell 14.42 points, or 0.11%, to 13,516.49.
Despite the weakness, the top three indices were set for weekly gains, with the high-tech Nasdaq tracking its best weekly performance since November 6, while investors huddled in Alphabet Inc, Apple Inc and Amazon.com Inc in anticipation of their earnings reports in the coming weeks.
With stock valuations approaching levels not seen since the Dotcom era, some market participants said the new variants of COVID-19 and the hiccups at vaccine launches pose short-term risks.
At an event at the White House on Thursday, President Joe Biden said the death toll in the US pandemic is likely to reach 500,000 next month.
“If we are forced to keep the economy closed and take longer than we want to go through immunizations and vaccinations against coronavirus, it will be a little more difficult on the market than people apparently predicted,” said Haworth.
The Senate Finance Committee unanimously approved the appointment of Janet Yellen as the first female secretary of the Treasury, indicating that she will easily obtain full Senate approval.
Decreasing issues outperformed advanced issues on the NYSE by a ratio of 1.54 to 1; on the Nasdaq, a 1.21 to 1 ratio favored the declines.
The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq Composite recorded 128 new highs and 6 new lows.
Reporting by Echo Wang in New York; Additional reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty, Anil D’Silva and Diane Craft