Wall Street moved lower after Apple and Microsoft posted earnings that fell short of expectations, leaving investors wondering about the recent tech rally that had pushed the Nasdaq to fresh records.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.4 percent, the Standard & Poor’s 500 Index shed 0.2 percent, while the Nasdaq Composite Index retreated 0.6 percent.
"We stepped right into the beginning of this week with IBM disappointing, followed by Microsoft, Apple and a couple of others, so we are just getting a little bit of heartburn in the market from those earnings releases on the tech side,” David Schiegoleit, managing director of investments at the Private Client Reserve of US Bank in Los Angeles, told Reuters.
Slides in shares of Apple and those of Microsoft, last trading 4.4 percent and 4.2 percent lower respectively, weighed on the Dow.
Analysts expressed concern that Apple relies too much on iPhone sales and demand in China.
"Where are you going to find growth in the world?" Colin Gillis, an analyst for BGC Partners, told Reuters. "You've done an amazing job sucking all the smartphone profits into your balance sheet, but smartphone sales are slowing. What's going to happen when the industry matures, just like PCs did?”
Microsoft posted a record quarterly loss after it wrote down its Nokia handset unit.
“Phones continue to struggle and it was pretty much in line in the cloud initiatives,” Dan Morgan, a senior portfolio manager at Synovus Securities, which owns Microsoft shares, told Bloomberg. “They’re still progressing but people would like them to move faster.”
Shares of Yahoo last traded 0.6 percent weaker after the company reported quarterly revenue that failed to meet the mark.
Of the 102 companies to report earnings through Wednesday morning, 70 percent have exceeded analyst expectations, while 55 percent have surpassed revenue forecasts, according to Reuters.
By Margreet Dietz