U.S. Stocks Fluctuate as Tech Shares Slide, Tesla Drops
U.S. stocks fluctuated, following the biggest advance in three weeks for the Standard & Poor’s 500 Index, as technology stocks declined for a third day and Tesla Motors Inc. and Priceline Group Inc. slumped.
The S&P 500 (SPX) fell 0.1 percent to 1,877.33 at 9:32 a.m. in New York. The Nasdaq Composite Index dropped 0.4 percent.
“We’ve had a very strong and interesting journey for the stock market in the last two years,” Guy de Blonay, a London-based fund manager at Jupiter Asset Management Ltd., which oversees about $55 billion, said by telephone. “As we realize that a lot of valuations have improved, the macro has dramatically improved, the bond market has rallied, it’s important that investors pause once in a while and ask themselves what’s the next step.”
Technology stocks have led this year’s selloff of companies whose growth are more tied to economic swings after a rally drove valuations to about double that of the S&P 500. The Nasdaq Composite Index is trading at 35 times reported earnings, compared with a multiple of 17.2 for the broad equity measure.
The Dow Jones Internet Composite Index has dropped 4.9 percent in the last two days, led by Groupon Inc., Twitter and Yahoo! Inc. An exchange-traded fund of social-media companies fell on eight of the past 11 days amid concern that user growth is slowing and valuations have become excessive.
The S&P 500 climbed yesterday as optimism that the Federal Reserve will continue to support the U.S. economy overshadowed a drop in Internet stocks. Chair Janet Yellen said in testimony to Congress that the central bank must continue to spur economic growth as indicators for inflation and employment remain far from the central bank’s goals.
Jobless Claims
Jobless claims fell 26,000 to 319,000 in the week ended May 3 from a revised 345,000 in the prior period, the Labor Department reported today. The median forecast of 52 economists surveyed by Bloomberg called for a decrease to 325,000.
European Central Bank President Mario Draghi signaled that officials are ready to cut interest rates next month. Officials are debating how much stimulus to give to a euro region economy haunted by the threat of deflation.
While Draghi gave no signal that radical moves such as quantitative easing are imminent, new economic forecasts next month may give them the scope to take interest rates into negative territory. Draghi also said that the euro is “a cause for serious concern” after its 6 percent climb over the past year took it close to $1.40.
“It seems the market is making a big bet that the ECB is going to start a QE program pretty soon,” Matt Maley, a Boston-based equity strategist with Miller Tabak & Co., said in a phone interview. “The fact that he didn’t make any comments to indicate that’ll happen sooner than later probably disappointed a few people.”
Some 17 S&P 500-listed companies report earnings today. Of the more than 440 companies that have released results this season, 75 percent have beaten estimates for profit, while 53 percent have exceeded projections for revenue, data compiled by Bloomberg show.
Source: bloomberg
