MARKET REPORT

Market slides on lackluster profits

NEW YORK - Stocks edged mostly lower Wednesday, breaking a six-day winning streak, as investors were disappointed by the latest round of earnings from U.S. companies.

A surprise drop in new home sales also weighed on the broader market.

The Standard & Poor’s 500 index fell 4.16 points, or 0.2 percent, to 1,875.39. The Dow Jones industrial average lost 12.72 points, or 0.1 percent, to 16,501.65, and the Nasdaq composite fell 34.49 points, or 0.8 percent, to 4,126.97.

Since hitting a two-month low on April 11, the S&P 500 had increased 3.5 percent through Tuesday.

“The market, even with those six days of gains, is still struggling to choose a direction,” said Joseph Tanious, a global market strategist with J.P. Morgan Funds.

High-flying biotechnology and Internet stocks were among the hardest hit.

Surgical robot-maker Intuitive Surgical fell the most in the S&P 500, plunging $48.40, or 12 percent, to $373.93. The company reported a 77 percent drop in first-quarter earnings and sold half as many robots as it did in the same period a year earlier. The company warned two weeks ago that earnings would come in far below expectations, causing its stock to fall sharply from a recent high of $540.63 reached April 3.

Amgen fell 5 percent after it also reported a steep drop in quarterly earnings, missing analysts’ expectations.

One bright spot in biotechnology was Gilead Sciences. The drugmaker rose $1, or 1.4 percent, to $73.86 after the company reported a surge in first-quarter earnings.

Gilead’s drug Sovaldi, a new treatment for hepatitis C, had $2.3 billion in sales in the first quarter alone, which beat the record for any drug in its first whole year on the market. While Sovaldi has a 90 percent success rate in curing hepatitis C, the drug has a price of $1,000 per pill, or around $84,000 for a typical course of treatment.

AT&T, despite posting quarterly results that beat analysts’ expectations, wasn’t able to impress investors this quarter. The Dow member’s shares fell $1.37, or 4 percent, to$34.92. The company reported earnings of 71 cents a share, 1 cent ahead of analysts’ expectations, and quarterly sales of $32.48 billion, which also beat expectations.

Other telecom stocks also fell. Verizon fell 49 cents, or 1 percent, to $47.43, while TMobile US lost $1.28, or 3.8 percent, to $29.81.

Facebook reported a profit of 34 cents a share, well ahead of the 24 cents per share analysts had expected. Facebook shares rose 3 percent in aftermarket trading. Netflix shares sank $19.40, or 5 percent, to $353.50 after Time Warner and Amazon.com announced that HBO programs would be available exclusively for Amazon Prime subscribers, seen as a big loss for Netflix.

U.S. company earnings have been generally coming in better than what investors had expected. But expectations are low this quarter, investors said, because the harsh winter earlier this year slowed business activity across the country. Earnings in the S&P 500 are expected to be down 1.5 percent from a year ago, according to FactSet.

“When you set the bar so low, U.S. companies are able to walk right over them,” Tanious said.

Business, Pages 26 on 04/24/2014

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