Healthcare woes slam stocks
U.S. stocks fell Friday as healthcare and technology companies continued to report weak first-quarter results, but thanks to some late buying, they managed to avoid major losses.
Stocks opened lower and fell further throughout the morning, extending a downturn from the day before. That followed a rout in European indexes. Late in the day, bond prices rose again, sending yields lower and pushing investors to buy utility and phone company stocks.
Dan Suzuki, senior U.S. equities strategist at Bank of America, said investors don’t like what they’re seeing in the results from technology companies.
“A lot of investors have been disappointed by results from tech this earnings season,” he said. So they are turning to bond-like stocks such as phone and utility companies, as well as small- and mid-cap stocks, which struggled in 2015.
“Everything that was working through last year has been an underperformer this year, and vice versa,” he said.
The Dow Jones industrial average fell 57.12 points, or 0.3%, to 17,773.64. It was down as much as 178 points earlier in the day. The Standard & Poor’s 500 index sank 10.51 points, or 0.5%, to 2,065.30. The Nasdaq composite index dropped 29.93 points, or 0.6%, to 4,775.36, marking its seventh decline in a row.
Healthcare companies took the biggest losses after a bout of weak earnings reports. Biotech drugmaker Gilead Sciences said its results were hurt by big discounts and rebates on its costly hepatitis C medicines, and its stock slid 9.1% to $88.21. Rival biotech giant Amgen reported relatively solid results but fell 1.4% to $158.30.
Health insurer Molina Healthcare slashed its full-year guidance because of higher medical care costs in Ohio and Texas, expenses related to recent acquisitions, and pharmacy costs, especially in Puerto Rico. It plunged 19.4% to $51.76.
Molecular diagnostics company Cepheid dived 19.4% to $28.54 as analysts were disappointed with its revenue projections for the second quarter.
Tech stocks continued to slide. After its profit fell short of estimates, electronic storage company Seagate Technology tumbled 19.1% to $21.77. Hard drive maker Western Digital dropped 11.3% to $40.87. Apple, which is in a deep two-week slide, fell an additional 1.1% to $93.75. Like the Nasdaq, Apple has fallen seven days in a row.
Bond prices rose slightly, and yields continue to slip. The yield on the 10-year U.S. Treasury note fell to 1.82% from 1.83%. Utility companies made the biggest gains, as NextEra Energy went up 1% to $117.58.
Better results at consumer companies sent those stocks higher. E-commerce giant Amazon said its revenue jumped 28% in the first quarter, and the company turned a far bigger profit than analysts expected. Cloud-based Amazon Web Services performed well. Amazon shares rose 9.6% to $656.59.
Consumer products maker Newell Brands gave a strong outlook for the year after it reported solid results in the first quarter, and its stock rose 4.9% to $45.54. Online travel company Expedia reported a bigger adjusted profit and greater sales than expected, and its stock jumped 8.3% to $115.77.
Digital TV listing company Rovi said it will buy digital video recording company TiVo for about $1.1 billion in cash and stock. TiVo advanced 5.9% to $9.98, and Rovi rose 1.6% to $17.62.
Stocks in Europe took big losses. Official data showed the eurozone economy rose by a surprising 0.6% in the first quarter, but investors were concerned that inflation slipped in April. France’s CAC 40 fell 2.8%, and Germany’s DAX lost 2.7%. Britain’s FTSE 100 shed 1.3%.
The yen continued to gain strength, as it has done over the past few months. It jumped Thursday after the Bank of Japan held off on implementing any new economic stimulus measures. On Friday the dollar fell to 106.73 yen from 108.09 yen. Japanese markets were closed for a holiday Friday. In Hong Kong, the Hang Seng index fell 1.5%, and Seoul’s Kospi gave up 0.3%.
Metals prices continued to rise. Gold advanced $24.10, or 1.9%, to $1,290.50 an ounce, and silver rose 23 cents, or 1.3%, to $17.82 an ounce. Gold is trading at 15-month highs. Copper climbed 5 cents, or 2.3%, to $2.28 a pound.
Benchmark U.S. crude fell 11 cents to $45.92 a barrel in New York. Brent crude, used to price international oils, edged down 1 cent to $48.13 a barrel in London.
In other energy trading, wholesale gasoline slipped 1 cent to $1.58 a gallon. Heating oil fell 3 cents, or 1.9%, to $1.38 a gallon. Natural gas rose 10 cents, or 4.8%, to $2.18 per 1,000 cubic feet.
The euro rose to $1.1454 from $1.1351.
