WALL STREET dipped on Wednesday as disappointing forecasts from videogame makers pulled the communications sector lower, but a boost from technology companies kept the main indexes near two-month highs.
Electronic Arts Inc slid 13.2 per cent, while Take-Two Interactive Software Inc fell 10.5 per cent, leading the communication services sector down 1.10 per cent, the most among the nine major sectors in the red.
Activision Blizzard Inc also fell 9.1 per cent.
Anadarko Petroleum Corp was down 6.1 per cent after the oil and gas producer reported a fourth-quarter profit that missed analysts’ estimates by a wide margin.
Leading gains on the technology sector, which was up 0.15 per cent, were chipmakers with the Philadelphia chip index up 2.67 per cent.
Apple supplier Skyworks Solutions Inc jumped 12.6 per cent after announcing a $2 billion buyback, while Microchip Technology rose 7.6 per cent after its quarterly profit beat estimates.
The possibility of the S&P 500 extending its winning streak for the sixth straight day was under pressure.
A strong run in stocks recently, boosted by US-China trade optimism and a dovish stance from the Federal Reserve has put the benchmark index about 7 per cent away from its record closing high in September.
Earnings have also been contributing to market optimism. About 70 per cent of more than half of the S&P 500 companies that have reported earnings have topped profit expectations, according to IBES data from Refinitiv.
“The market’s recovery has been pretty strong and it’s running out of little bit of momentum here. The next big step really would require some kind of trade agreement with China,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
“Today’s dip is very normal profit taking after weeks of positive gains.”
US Treasury Secretary Steven Mnuchin said trade talks with China last week were “very productive” and confirmed that he and other US officials will travel to Beijing for the next round of meetings, as the world’s biggest economies aim to clinch a deal to avert a March 2 increase in US tariffs on Chinese goods.
At 11.27 am ET the Dow Jones Industrial Average was down 40.32 points, or 0.16 per cent, at 25,371.20, the S&P 500 was down 8.34 points, or 0.30 per cent, at 2,729.36 and the Nasdaq Composite was down 27.70 points, or 0.37 per cent, at 7,374.39.
Capri Holdings Ltd, formerly Michael Kors, jumped 13 per cent after the company posted a better-than-expected holiday-quarter profit and raised its full-year revenue forecast.
On Tuesday, US President Donald Trump offered no specific economic policy initiatives in his State of the Union address and reiterated his vow to build a wall along the US-Mexico border.
His reference to the Feb 15 deadline for a budget deal also reminded investors that a second shutdown was not fully off the table.
Also expected on Wednesday is Fed Chairman Jerome Powell’s address at 7.00 pm ET in Virginia.
Declining issues outnumbered advancers for a 1.82-to-1 ratio on the NYSE and a 1.38-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and two new lows, while the Nasdaq recorded 25 new highs and 11 new lows. – Reuters
