Concern over tech futures, Ukraine, leads to market pullout
NEW YORK – The stock market fell sharply Friday, dragged down by disappointing quarterly results from Amazon and Ford. Escalating tensions between the U.S. and Russia over Ukraine also weighed on the market.
Worried investors sold their risky assets and moved into the traditional havens: bonds, gold and stocks that pay high dividends like utilities.
The Standard & Poor’s 500 fell 15.21 points, or 0.8 percent, to 1,863.40. The Dow Jones industrial average lost 140.19 points, or 0.9 percent, to 16,361.46 and the Nasdaq composite lost 72.78 points, or 1.8 percent, to 4,075.56.
Friday’s sell-off was enough to push the Dow, S&P 500 and Nasdaq into the red for the week.
Technology stocks, which have been volatile for the last two months, were once again a hotbed of selling.
Amazon, the world’s largest online store, sank $33.32, or 10 percent, to $303.83. Amazon reported late Thursday an increase in first-quarter profit, but the company also said that spending on investments will likely lead to an operating loss in the second quarter.
The retail giant dragged the rest of the technology sector lower, making it one of the worst performing sectors in the S&P 500. Netflix fell more than 6 percent, Priceline lost 5 percent, Facebook fell 5 percent and Twitter lost more than 7 percent.
Investors have had little patience for companies missing their forecasts this quarter, said Scott Clemons, chief investment strategist at Brown Brothers Harriman.
“The market is in a precarious position at the moment and overreacts to bad news far more than it did last year,” he said, noting as an example the 10 percent drop in Amazon’s stock price, even though the company meet analysts’ forecasts for the most recent quarter.
For a second day, the escalating tensions between Russia and Ukraine weighed on U.S. investor sentiment.
Investments thought to be less risky were among the few assets to rise Friday. Bond prices rose, pushing the yield on the 10-year Treasury note down to 2.66 percent from 2.68 percent Thursday. Gold rose $10.20, or 0.8 percent, to $1,300.80 an ounce.
“Cash on the sidelines is looking for safety over anything else right now,” said Mike Serio, a regional chief investment officer with Wells Fargo Private Bank.
Dividend-rich utility stocks also rose. The Dow Jones utility index, a basket of 15 utility stocks, rose 1 percent to 551.66, its highest level since December 2007.
The U.S. might have put in place the sanctions against Russia and its officials to punish that country, but the measures are starting to have an impact the profits of some U.S. companies as well.
Visa fell $10.47, or 5 percent, to $198.93 after it warned that the U.S. sanctions were causing Russian banks to use other companies to process payments.