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US stocks fall as media and healthcare companies post losses


The Dow Jones industrial average added 8.01 points to 20,957.90

The Dow Jones industrial average added 8.01 points to 20,957.90

The Dow Jones industrial average added 8.01 points to 20,957.90

US stocks dipped on Wednesday as media and healthcare companies took losses.

The Federal Reserve left interest rates unchanged, but bond yields and banks rose as investors felt rates would increase soon.

First-quarter results for most companies have been good, but stocks were lower all day as a few big-name firms disclosed shaky results.

Media companies tumbled after Time Warner said its cable advertising revenue fell, while Apple slipped after iPhone sales came in lower than investors expected, but the stock recovered nearly all of its losses.

The Federal Reserve left interest rates unchanged, but also said it expects the economy to start growing at a faster pace. That could set the stage for the Fed to boost interest rates in June.

Bond yields and interest rates rose after the Fed made its statement. That sent bank stocks higher, which narrowed the market's losses. The dollar also got a bit stronger.

Ryan Detrick, senior market strategist for LPL Financial, said he agrees that the economy will improve following a sluggish first quarter.

"Earnings have been strong across the board," he said. "The economy isn't quite as weak as that GDP (report) makes it look."

The Standard & Poor's 500 index slipped 3.04 points, or 0.1%, to 2,388.13. The Dow Jones industrial average added 8.01 points to 20,957.90. The Nasdaq composite sank 22.82 points, or 0.4%, to 6,072.55. The Russell 2000 index, which tracks smaller companies, declined 8.44 points, or 0.6%, to 1,390.92.

The Federal Reserve said economic growth slowed over the last six weeks as inflation stayed low and spending did not increase much.

However, it expects growth to pick up and said inflation should eventually reach its target of 2%. Experts think it is likely the central bank will raise rates in June, as it did last December and again in March. Mr Detrick said he thinks the Fed will raise interest rates two more times this year.

Media companies slumped after Time Warner, the owner of HBO and TBS, said revenue from cable advertising fell in the first quarter.

Time Warner has agreed to be bought by AT&T, so its stock hardly budged, but its competitors slumped. Walt Disney shed 2.75 dollars, or 2.4%, to 111.62 dollars, for its biggest loss in almost a year. Viacom sank 3.20 dollars, or 7.5%, to 39.26 dollars and CBS lost 2.20 dollars, or 3.4%, to 63.46 dollars. Twenty-First Century Fox gave up 1.55 dollars, or 5.1%, to 28.88 dollars.

Apple's first-quarter iPhone sales and projections for the current quarter were not quite as good as analysts hoped. Apple stock struggled in late 2015 and for much of 2016 as iPhone sales slowed down and then fell for the first time. But they have climbed 27% this year and the stock closed at an all-time high on Tuesday. It fell as much as 2.2% early on Wednesday, but finished down just 45 cents at 147.06 dollars.

Irish generic drug maker Perrigo said its offices were searched as part of a Justice Department investigation into pricing by generic drug companies. Perrigo dropped 3.88 dollars, or 5.1%, to 72.35 dollars. Several other companies have previously disclosed subpoenas connected to that probe, including Mylan and Lannett. Mylan fell 98 cents, or 2.6%, to 37.19 dollars. Lannett had a disappointing quarter as drug pricing remained weak, and its stock tumbled 5.05 dollars, or 18.6%, to 22.10 dollars.

Biotech drugmaker Gilead Sciences reported disappointing profit and revenue as sales of its hepatitis C drugs Sovaldi and Harvoni plunged in all major markets, and its stock gave up 1.38 dollars, or 2%, to 67.21 dollars.

Bond prices turned lower. The yield on the 10-year Treasury note rose to 2.32% from 2.29% and banks climbed.

US benchmark crude added 16 cents to 47.82 dollars a barrel in New York. On Tuesday US crude oil closed at its lowest price since mid-November. Brent crude, used to price international oils, rose 33 cents to 50.79 dollars a barrel in London.

Wireless spectrum licence company Straight Path Communications continued to soar. It said it has received an all-stock offer worth 135.96 dollars per share from an undisclosed buyer. AT&T had agreed to pay 95.63 dollars per share. The company said it informed AT&T that the new offer is superior, and AT&T will have three days to decide if it wants to raise its offer.

Straight Path's stock jumped 29.38 dollars, or 23.4%, to 155.20 dollars.

Vehicle parts maker Delphi Automotive surged after it said it will spin off its powertrain systems business into a separate publicly traded company. Investors often applaud such transactions, which are tax-free, because they can help fast-growing businesses concentrate on expanding. Delphi's stock added 8.56 dollars, or 10.9%, to 87.01 dollars.