Tech Stocks Lead U.S. Indexes Lower

Nichole Harper
07 May, 2014
New York City

Market indexes on Wall Street struggled and tech heavy Nasdaq Composite Index plunged 1.1%. AOL, FireEye, Groupon and Zulily plunged after weaker than expected results. Whole Foods slumped 20% after the organic food retailer trimmed outlook for the second time.

[R]1:25 PM New York – Market indexes on Wall Street struggled and tech heavy Nasdaq Composite Index plunged 1.1%. AOL, FireEye, Groupon and Zulily plunged after weaker than expected results. Whole Foods slumped 20% after the organic food retailer trimmed outlook for the second time.[/R]

Market indexes continued weak trading trend after mixed batch of earnings. Tech and Internet stocks led the decliners after AOL, FireEye Groupon, and Zulily reported weaker than expected results.

S&P 500 index increased 2.22 to 1,869.94 and the Nasdaq Composite Index plunged 1.1% or 46.39 to 4,034.71.

Inflated Internet and tech stocks declined for the third day in a row after several companies missed or lowered outlook.

Fed President Janet Yellen stressed the importance of stimulus and said the central bank must continue to spur economic growth as measures of inflation and employment trail Fed’s goals.

Yellen highlighted slowdown in housing market, financial stress in emerging markets and rising geopolitical tensions are risks to the economy.

World Markets

In London trading, FTSE 100 index slid 0.3% or 21.48 to 6,777.08 and in Frankfurt the DAX index rose 0.2% or 22.66 to 9,490.19.

In Paris, CAC 40 index edged up 0.07% or 3.11 to 4,431.18.

Market indexes in Tokyo plunged after a 4-day weekend and the yen gained after tensions rose between Russia and Ukraine.

The talks of war between NATO member nations and Russia also dented the sentiment.

The Nikkei 225 Stock Average declined 424.06 or 2.9% to 14,033.45 and the Topix index dropped 30.47 or 2.6% to 1,152.01.

The yen closed at 101.47 against the U.S. dollar.

U.S. Stocks in Review

AOL, Inc ((AOL)) plunged 25% or $11.11 to $32.79 after the operator websites including TechCrunch reported lower than expected earnings on higher cost of traffic acquisition.

Groupon Inc ((GRPN)) plunged 19.4% or $1.30 to $5.41 after the daily deal site operator forecasted second-quarter revenues between $725 million and $775 million and adjusted earnings per share between zero and 2 cents. Analysts were looking for as high as 3 cents a share.

Mondelez International Inc ((MDLZ)) surged 7.9% or $2.79 to $38 after the food and beverage maker reported net revenue in the first-quarter ending in March fell 1.2% to $8.64 billion.

Net earnings in the quarter tumbled 69.6% to $163 million or 9 cents a diluted share compared to $536 million or 30 cents.

Separately, the company said it intends to combine its coffee portfolio with D.E Master Blenders 1753 B.V.'s coffee business to create the world's leading pure-play coffee company.

The combination transaction is expected to be completed in 2015.

The Walt Disney Company ((DIS)) gained 48 cents to $81.51 after the entertainment company reported revenues in the second-quarter ending in March climbed 10% to $11.65 billion.

Net income in the quarter surged 27% to $1.92 billion or $1.08 a diluted share compared to $1.51 billion or 83 cents.

The company said revenue from the studio entertainment climbed 35% to $1.80 billion and consumer products jumped 16% to $885 million from a year ago.

Whole Foods Market, Inc ((WFM)) tumbled 19.7% or $9.45 to $38.50 after the organic foods retailer said total sales in the second-quarter ending in March climbed 10% to $3.3 billion. Comparable store sales in the quarter jumped 4.5%.

Net income in the quarter was flat at $142 million and diluted earnings per share were flat at 38 cents from a year ago.

The stock tumbled after the company turned cautious and lowered its current fiscal year net income to $1.56 a share from the previous estimate as high as $1.65 a share.

Zulily Inc ((ZU)) tumbled 32% or $14.74 to $31.15 after the online retailer reported a loss of 2 cents a share compared to analyst estimates ranging between 1 cent loss to a breakeven.