Falling tech stocks pull US indexes back from record highs
US stock indexes pulled back from their record highs on Thursday after an afternoon dip for technology companies helped overshadow another big day for telecoms.
The Standard & Poor's 500 index fell 2.41 points, or 0.1%, from its record set a day earlier to close at 2,475.42.
The Nasdaq composite likewise fell from a record, down 40.56, or 0.6%, to 6,382.19.
The Dow Jones industrial average was an exception, and it rose 85.54, or 0.4%, to 21,796.55 to set another all-time high.
Stocks had been on track for another quiet day of gains in a year full of them, but Apple, Microsoft and other technology stocks suddenly changed direction in the afternoon.
After being up as much as 0.6% in morning trading, tech stocks in the S&P 500 finished the day down 0.8%.
It was the worst performance among the 11 sectors that make up the index.
Close to half of the companies in the S&P 500 have reported their earnings for the latest quarter, and the results have been mostly encouraging.
Not only are profits growing, so are revenues for many companies.
But expectations were high coming into the reporting season, and shares rallied accordingly.
Now, companies' stocks are getting less of a boost than usual when they report earnings that are above analysts' forecasts, said Nate Thooft, senior portfolio manager at Manulife Asset Management.
"And for those few that are disappointing, they're getting penalised significantly," Mr Thooft said.
Stock prices are dropping more than usual when companies fall short of expectations, he said.
Health care stocks were also weak, and drug maker AstraZeneca sank after it said its lung cancer drug Imfinzi did not reach its goals in a clinical trial.
Industrial companies also struggled, and Johnson Controls tumbled after it reported weaker-than-expected revenue for the latest quarter and trimmed the upper end of the range for its forecast for full-year earnings per share.
On the opposite side were telecom stocks, which rallied for a second straight day.
Verizon Communications had its best day in more than eight years after it reported more revenue than analysts expected. Many more customers added wireless phones than Wall Street had forecast.
Verizon's big day follows AT&T's, which had its biggest move since 2009 on Wednesday after it reported stronger-than-expected earnings.