NEW YORK - Stocks drifted lower in afternoon trading Wednesday after a strong start and gave up their gains from Tuesday. Facebook led the technology sector lower as investors gave the company’s latest acquisition the thumbs down.
The Standard & Poor’s 500 index fell the most in two weeks and is now flat for the year. Investors are waiting for a catalyst that will either push the market higher or cause a sustained sell-off. Many anticipate that the stock market will resume its upward trajectory later in the year as the economy strengthens after an unusually harsh winter.
“We’re going through this back and forth, I would call it a consolidation phase, digesting the huge gains we’ve had,” said David Lafferty, chief market strategist at Natixis Global Asset Management. “Most of the movement in stocks will tend to be in the latter half of the year.”
The S&P 500 fell 13.06 points, or 0.7 percent, to 1,852.56. The index is up 0.2 percent for the year, after rising almost 30 percent in 2013. The Dow Jones industrial average lost 98.89 points, or 0.6 percent, to 16,268.99. The technology heavy Nasdaq composite fell more than the other indexes, giving up 60.69 points, or 1.4 percent, to 4,173.58.
Facebook shares slumped $4.51, or 6.9 percent, to $60.38 after announcing a $2 billion acquisition of virtual reality company Oculus late Monday. It was Facebook’s second big acquisition in as many months. Last month, the company announced that it would pay $19 billion for messaging startup WhatsApp.
Investors may be questioning whether the returns on those investments will ultimately justify the big outlays, said Lawrence Creatura, a portfolio manager at Federated Investors.
Another loser in the technology sector was King Digital Entertainment.
The online games company, which makes the popular Candy Crush Saga, slumped on its first day of trading. The company raised $499.5 million in an initial public offering. The company’s stock fell $3.50, or 15.6 percent, to $19 on its first day of trading.
The stock market opened higher after a report showed that orders to U.S. factories for long-lasting manufactured goods rose in February by the largest amount since November, 2.2 percent. Demand for airplanes and automobiles drove the gains, according to the Commerce Department report. Last month’s rise in durable goods orders followed a 1.3 percent drop in January.
Health-care companies bucked the downward trend and were the only industry sector to rise. The sector is rebounding after getting caught up in a brief sell-off of biotechnology stocks on Friday and Monday. Biotech companies slumped after lawmakers raised concerns about the prices of some drugs.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.69 percent from 2.75 percent from late Tuesday. The price of crude oil rose $1.07, or 1.1 percent, to $100.26 a barrel. Gold fell $8, or 0.6 percent, to settle at $1,303.40 an ounce.
Business, Pages 26 on 03/27/2014