Apple shares drop more than 2% to weigh heavily on benchmarks
U.S. stocks dropped from all-time highs Thursday, with the Nasdaq and S&P 500 falling into negative territory, as tech stocks gave up early gains inspired by another round of largely upbeat corporate earnings that included well-received results from Facebook Inc.
The S&P 500 fell 11 points, or 0.4%, to 2,467, as industrials fell 0.9%, health-care stocks fell 1%, and tech stocks dropped 1.2%, after the index touched an intraday record of 2,484.04. Earlier in the session, the tech sector was up as much as 0.6%.
The Nasdaq Composite Index fell 64 points, or 1% to 6,358, after touching an intraday record of 6,460.84.
The Dow Jones Industrial Average remained in positive territory, up 17 points, or 0.1%, at 21,728, as Verizon Communications Inc.(VZ) shares soared 7.5% and Merck & Co.(MRK) shares rallied 3.2%. Apple Inc. (AAPL) shares weighed on the index with a 2.4% decline. Earlier, the blue-chip average set an intraday record of 21,790.13.
Stocks pulled back in midday trading as gains in tech stocks swung to losses.
"After Facebook earnings, people are getting jittery about valuations so there's a rebalancing going on," said Diane Jaffee, senior portfolio manager at TCW. Jaffee added that the broad weight upon tech stocks, as shown by the drop in Apple, was likely exchange-traded fund driven, and not a singling out of any particular tech name.
After rising more than 5% earlier, Facebook(FB) shares were up 3% a day after the social media giant posted results that beat quarterly earnings expectations (http://blogs.marketwatch.com/thetell/2017/07/26/facebook-earnings-put-instagram-in-focus-amid-shift-in-newsfeed-ads-live-blog/). The company could be nearing a $500 billion market cap (http://www.marketwatch.com/story/facebook-heads-toward-500-billion-market-cap-after-earnings-2017-07-26) if shares maintain their strength throughout the session. The stock has already jumped nearly 50% thus far this year.
Facebook is one of the so-called FAANG stocks, a reference to the quintet of technology and internet names (Facebook, Apple, Amazon (AMZN), Netflix (NFLX), and Google parent Alphabet (GOOGL)(GOOGL) that have driven market returns thus far this year. However, those sharp gains have also raised questions over valuations.
"These are the points where people take profits," said Mark Kepner, managing director of sales and trading at Themis Trading. Plus, with the pressure coming midsession a toning down of volume can amplify moves, Kepner said.
A drop in the Dow Jones Transportation Average (http://www.marketwatch.com/story/dow-transports-tumble-toward-biggest-selloff-in-over-a-year-2017-07-27), which was down 3.6%, also offered a signal for an equities pullback.
"There has been a marked divergence between Dow Transports and Dow Industrials and whenever this happens people like to reduce risk," said Ian Winer, head of the equities division at Wedbush Securities. "And the best way to reduce risk right now is by selling overvalued tech stocks."
Read:Next stop for Facebook shares? $200, say analysts applauding results (http://www.marketwatch.com/story/next-stop-for-facebook-shares-200-say-analysts-applauding-results-2017-07-27)
Read:Facebook keeps warning about growth, but growth doesn't stop (http://www.marketwatch.com/story/facebook-keeps-warning-about-growth-but-growth-doesnt-stop-2017-07-26)
Among other corporate results, Procter & Gamble Co.(PG) rose 1.1% after the Dow component posted a fourth-quarter profit that was above expectations (http://www.marketwatch.com/story/procter-gamble-shares-edge-up-following-q4-earnings-beat-2017-07-27). United Parcel Service Inc. (UPS) also fell 3.9% despite its results topping consensus forecasts (http://www.marketwatch.com/story/ups-shares-rise-as-earnings-beat-estimates-2017-07-27).
MasterCard Inc.(MA) also reported stronger-than-expected earnings (http://www.marketwatch.com/story/mastercard-beats-estimates-as-consumer-spend-more-2017-07-27) and revenue for the second quarter as consumers boosted their spending. Shares were 2.3% lower.
Twitter (TWTR) tumbled 14% after the microblogging platform reported lackluster user growth. The stock is on track for its biggest one-day decline since October.
Comcast Corp.(CMCSA) posted profit and revenue that beat analysts expectations (http://www.marketwatch.com/story/comcast-profit-revenue-beat-analysts-expectations-2017-07-27), and shares fell 0.9%.
PayPal Holdings Inc.(PYPL) shares fell 0.3% after the mobile payment group topped earnings views and raised guidance (http://www.marketwatch.com/story/paypal-shares-up-2-after-company-tops-views-raises-guidance-2017-07-26).
After the market close, Amazon.com Inc.(AMZN) is scheduled to report its quarterly results (http://www.marketwatch.com/story/amazon-earnings-with-a-dominant-position-in-the-us-analysts-look-abroad-2017-07-25), along with Expedia Inc. (EXPE), Intel Corp.(INTC), Starbucks Corp.(SBUX) and Mattel Inc.(MAT).
Overseas companies with U.S.-listed shares were also active. AstraZeneca PLC(AZN.LN) (AZN.LN) sank 15% after the drug heavyweight reported a negative result in a Phase 3 clinical trial of its lung-cancer treatment Mystic (http://www.marketwatch.com/story/astrazenecas-mystic-cancer-drug-trial-fails-2017-07-27). (http://www.marketwatch.com/story/astrazenecas-mystic-cancer-drug-trial-fails-2017-07-27) Shares of rival Bristol-Meyer Squibb Co.(BMY) fell 2.9% after its results.
Anheuser-Busch InBev NV(ABI.BT) (ABI.BT) moved 5.5% higher after the brewing giant posted a surge in quarterly profit (http://www.marketwatch.com/story/ab-inbev-profit-up-despite-drop-in-us-market-share-2017-07-27).
(http://www.marketwatch.com/story/ab-inbev-profit-up-despite-drop-in-us-market-share-2017-07-27)And the world's largest liquor maker Diageo PLC(DEO) soared 5.2% after lifting its target for profit margin growth (http://www.marketwatch.com/story/diageo-full-year-earnings-lifted-by-currency-boost-2017-07-27).
Economic data: The number of Americans who applied for first-time unemployment benefits rose in late July but remained near the lowest level in decades (http://www.marketwatch.com/story/us-jobless-claims-climb-10000-to-244000-2017-07-27). Separately, orders for durable or long-lasting U.S. goods soared 6.5% in June (http://www.marketwatch.com/story/boeing-bonanza-durable-goods-orders-soar-65-in-june-2017-07-27).
Other markets: European stocks traded mixed (http://www.marketwatch.com/story/european-stocks-search-for-direction-in-busy-session-for-earnings-2017-07-27) as investors absorbed a heavy stream of earnings, while in Asia , equity markets were broadly positive (http://www.marketwatch.com/story/asia-stocks-broadly-positive-nikkei-lifted-by-nintendo-2017-07-27).
Gold prices (http://www.marketwatch.com/story/gold-snaps-back-post-fed-to-trade-at-highest-level-since-early-june-2017-07-27) settled up 0.9% at $1,260 an ounce, with precious and base metals rising across the board, while oil prices (http://www.marketwatch.com/story/oil-pauses-after-bullish-data-sends-price-up-6-for-the-week-so-far-2017-07-27) rose 0.6% at settle at $49.04 a barrel.
The ICE Dollar Index rose following an earlier decline, and was last trading up 0.3% at 93.90. The dollar weakened on Wednesday, after some analysts viewed the Federal Reserve as striking a dovish tone in its policy statement (http://www.marketwatch.com/story/fed-to-wind-down-bond-holdings-relatively-soon-2017-07-26).
--Barbara Kollmeyer in Madrid and Anora Mahmudova in New York contributed to this report.
(END) Dow Jones Newswires
July 27, 2017 15:14 ET (19:14 GMT)