Sun, Apr 27, 2014 page15

• US stocks end week down on weak tech, Ukraine

  • AFP, NEW YORK
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  Apple Inc wowed investors this week while a disappointing outlook from Amazon.com Inc revived anxiety about the overall tech sector as the busiest week of first-quarter earnings season concluded.

  Deep losses on Friday pushed the market into the red for the week, with the tech-rich NASDAQ Composite Index suffering the biggest losses, shedding 19.96 points (0.49 percent) to close on 4,075.56, while the Dow Jones Industrial Average declined 47.14 (0.29 percent) to 16,361.46 points and the broad-based S&P 500 slipped 1.45 (0.08 percent) to end at 1,863.40.

  Broad selling pressure, which had receded slightly for about a week-and-a-half, came back with a vengeance on Friday after Amazon delivered a skimpy outlook for profit margins and projected second-quarter operating losses as high as US$455 million.

  Analysts also cited rising concerns about Ukraine as a major drag on the market.

  Marblehead Asset Management director Mace Blicksilver said that the week’s performance of so-called “glamor” stocks like Facebook Inc and Netflix Inc suggests that “this buyer’s strike is still going on.”

  Netflix initially surged after the online streaming company reported that revenues breached US$1 billion and that it planned a bump in subscription prices. Facebook also got a quick lift after announcing that profits tripled to US$642 million on strong gains in mobile users and mobile advertising.

  Nevertheless, both stocks ended the week with declines.

  “What you see today is a continuation of the trend of the high-growth stocks struggling,” Kenjol Capital Management portfolio manager David Levy said.

  Despite the weak Amazon report and a handful of other earnings disappointments, the bulk of first-quarter reports so far have bested expectations. Of the 203 companies that reported through Thursday, 138 beat expectations, 45 missed projections and 20 were on target, according to S&P Capital IQ.

  Industrial heavyweight Caterpillar Inc, which has had disappointing results in recent quarters, raised its profit forecasts as improved performance in the energy, transportation and construction sectors that offset continued weakness in mining.

  Fellow Dow member Boeing Co also pleased Wall Street by raising its annual profit outlook due to strong demand for new jetliners. Perhaps the biggest standout of the week was Apple, which surged nearly 9 percent in the two days after releasing its report on Wednesday.

  In addition to reporting profits that beat expectations by a wide margin, the maker of the iPhone unveiled a dividend increase, a ramp-up in stock buybacks and a seven-for-one stock split.

  However, analysts cautioned that Apple still faces pressure to launch another blockbuster product.

  “We are ready,” Forrester analyst Frank Gillett said. “It is time for Apple to show us something from their labs; from behind their closed doors.”

  Other strong reports came from American Airlines Inc, Comcast Corp, Dow Chemical Co, Lockheed Martin, Microsoft Corp and Travelers Companies. The disappointments included Ford Motor Co and United Airlines Inc.

  Besides earnings, investors kept an eye on increasingly fraught tensions between Russia and Ukraine that continue to reverberate with governments around the world.

  What investors fear the most about the East-West standoff over Ukraine is the unknown, BMO Global Asset Management market strategist Brent Schutte said.

  “You can never say for sure what’s going to occur or if it spirals out of control,” he said.

  Earnings will continue to play a central role in markets next week with reports from several prominent companies, including ExxonMobil Corp, Merck & Co Inc, Time Warner Inc and Twitter Inc.

  Investors are also set to digest a much heavier week of economic data, with major releases set to include the first estimate of the US’ GDP and the monthly jobs report for this month.

  The US Federal Reserve will also be back in the headlines with Wednesday’s conclusion of a two-day meeting of the committee that sets its monetary policy.
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