Disappointing Tech Earnings Lead To Weakness On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly lower during trading on Wednesday, as traders once again reacted negatively to the latest earnings news. The tech-heavy Nasdaq showed a notable decline, pulling back further off the record closing high set on Monday.

The major averages ended the day in negative territory but off their lows for the session. While the Nasdaq slid 36.35 points or 0.7 percent to 5,171.77, the Dow fell 68.25 points or 0.4 percent to 17,851.04 and the S&P 500 edged down 5.06 points or 0.2 percent to 2,114.15.

The weakness on Wall Street came amid a negative reaction to earnings news from tech giants such as Apple (AAPL) and Microsoft (MSFT).

Shares of Apple tumbled 4.3 percent after the company reported better than expected third quarter earnings but on weaker than expected iPhone unit sales. The company also provided disappointing fourth quarter revenue guidance.

Microsoft also slumped 3.7 percent after the software giant reported a $3.2 billion net loss for its fourth quarter, reflecting charges related to its acquisition of Nokia's (NOK) devices and services business.

Internet giant Yahoo (YHOO) also moved to the downside after reporting adjusted second quarter earnings that came in below analyst estimates.

Not all stocks moved lower on their quarterly results, however, with Whirlpool (WHR) posting a strong gain after reporting better than expected second quarter earnings.

On the U.S. economic front, the National Association of Realtors released a report showing a bigger than expected increase in existing home sales in June.

NAR said existing home sales climbed 3.2 percent to an annual rate of 5.49 million in June from a downwardly revised 5.32 million in May. Economists had expected existing home sales to edge up to an annual rate of 5.40 million.

With the bigger than expected increase, existing home sales are now are their highest level since reaching 5.79 million in February of 2007.

Sector News

Reflecting concerns about the outlook for the tech sector, semiconductor stocks saw substantial weakness on the day. The Philadelphia Semiconductor Index plunged by 2.5 percent but still ended the session well off its worst levels.

Linear Technology (LLTC) turned in one of the semiconductor sector's worst performances after reporting weaker than expected fourth quarter results and providing disappointing guidance.

Steel stocks also came under considerable selling pressure over the course of the session, dragging the NYSE Arca Steel Index down by 2.5 percent. The drop pulled the index down to a six-year closing low.

The weakness among steel stocks was partly due to news that BHP Billiton (BHP) forecast an increase in iron ore production in fiscal 2016.

Significant weakness was also visible among oil service stocks, which moved lower along with the price of crude oil. With crude for September delivery tumbling $1.67 to $49.19 a barrel, the Philadelphia Oil Service Index dropped by 1.7 percent.

Software, natural gas and telecom stocks also saw notable weakness, while housing and banking stocks bucked the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1.2 percent, while Hong Kong's Hang Seng Index dropped by 1 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index tumbled by 1.5 percent, the German DAX Index and the French CAC 40 Index fell by 0.7 percent and 0.5 percent, respectively.

In the bond market, treasuries moved modestly higher amid the continued weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.8 basis points to 2.322 percent.

Looking Ahead

The latest batch of earnings news may continue to attract attention on Thursday, with American Express (AXP) and Qualcomm (QCOM) releasing their quarterly results after the close of today's trading.

3M (MMM), Caterpillar (CAT), General Motors (GM), McDonald's (MCD), and United Continental (UAL) are also due to report their results before the start of trading on Thursday.

Trading could also be impacted by reaction to U.S. reports on weekly jobless claims and leading economic indicators.