A mixed bag of corporate earnings nudged U.S. stocks slightly lower Wednesday, snapping the market’s five-day winning streak.
Communications sector stocks, led by steep declines in video game companies, accounted for most of the market’s slide. Take-Two Interactive and Electronic Arts plunged after reporting earnings that fell far short of analyst expectations and issued weak forecasts, citing tougher competition.
Gains by technology stocks offset some of those losses, with Skyworks Solutions leading a rally in semiconductor companies.
“This is an earnings-driven market, and where you’ve seen both positive and negative price movement today it has largely been sector- and industry-specific,” said Paul Springmeyer, head of investments at U.S. Bank Wealth Management. “On balance, sales and earnings are really trending mostly above expectations.”
The Standard & Poor’s 500 index fell 6.09 points, or 0.2%, to 2,731.61. The benchmark index finished higher the previous five days in a row.
The Dow Jones industrial average slipped 21.22 points, or 0.1%, to 25,390.30. The Nasdaq composite fell 26.80 points, or 0.4%, to 7,375.28. The Russell 2000 index of smaller companies edged down 2.20 points, or 0.1%, to 1,518.02.
More than half the companies in the S&P 500 have already reported results for the last quarter of 2018, and most of those have turned in earnings that beat analysts’ forecasts.
“Earnings are in fact slowing, but they still remain positive,” Springmeyer said.
That has helped to allay some investors’ fears over a slowdown in growth. Still, broader economic concerns continue to hang over the market, including uncertainty over the U.S.-China trade war, the effects that tariffs are having on profits and consumers’ wallets, and signs of a general slowdown in global growth.
The latest quarterly snapshots from video game companies failed to impress traders Wednesday.
Take-Two, maker of the “Grand Theft Auto” and “Red Dead Redemption” games, gave investors a weak outlook for the current quarter. Electronic Arts, whose titles include “The Sims” and various sports games, including “Madden NFL,” flagged disappointing results in sales of its latest “Battlefield” game.
Both companies are grappling with competition from Epic Games’ hit “Fortnite.”
Take-Two and Electronic Arts plunged 13.8% and 13.3%, respectively. Activision Blizzard, maker of the “Call of Duty” and “Candy Crush” games, fell 10.1%.
A broad slide in homebuilder shares also weighed on the market. Hovnanian Enterprises led the pack with a 6.6% decline.
Traders bid up shares in several companies that reported improved quarterly results.
Snap, the company behind photo-messaging app Snapchat, ascended 22% as advertising gains drove revenue growth in the fourth quarter. The revenue increase helped cut the company’s losses. It also maintained its user base.
New York Times jumped 10.3% in heavy trading after the newspaper publisher touted a big gain in digital subscribers and digital revenue in the fourth quarter. Its earnings and revenue topped Wall Street’s forecasts.
Capri Holdings, owner of the Michael Kors, Jimmy Choo and Versace clothing and footwear brands, jumped 11.3% after reporting quarterly earnings that were far larger than analysts were expecting.