Weak Tech Stocks Drag S&P 500 and European Markets Down

Nichole Harper
22 Jul, 2015
New York City

Market indexes on Wall Street declined after Apple and Microsoft declined. Apple reported 38% surge in fiscal third quarter and sold 35% more iPhones, but fell short of some expectations. Microsoft Corp reported its largest quarterly loss ever. Tech stocks weakness weighed on European indexes.

[R]1:20 PM – Market indexes on Wall Street declined after Apple and Microsoft declined. Apple reported 38% surge in fiscal third quarter and sold 35% more iPhones, but fell short of some expectations. Microsoft Corp reported its largest quarterly loss ever. Tech stocks weakness weighed on European indexes.[/R]

Market indexes were under pressure on Wall Street after Apple reported sales that missed some analysts’ estimates.

Swings in Apple share generally has a larger sway in widely followed market indexes like the tech-heavy Nasdaq index and the price weighted indexes S&P 500 and Dow Jones.

Apple Inc’s stock fell more than 4% after the gadget maker said current quarter revenue are likely to fall below market expectations.

On the economic front, seasonally adjusted annual rate for existing home sales in June jumped 3.2% to 5.49 million from downwardly revised 5.32 million in May and surged 9.6% from a year ago month, the National Association of Realtors reported today.

On Wall Street, Tollbooth Strategy Index fell 0.3% or 35.93 to 10,860.57.

S&P 500 index slid 6.98 or 0.3% to 2,112.06 and the Nasdaq Composite Index slipped 43.96 or 0.8% to 5,164.19.

Crude oil in New York decreased 85 cents to $50.01 a barrel and gold dropped $12 to $1,091.50 an ounce.

U.S. Movers

Apple Inc ((AAPL)) declined 5.8% or $7.61 to $123.16 after the media devices maker reported revenue in the third-quarter ending in June soared 33% to $49.61 billion from a year ago period.

Net income in the quarter climbed 39% to $10.7 billion or $1.85 per diluted share compared to $7.7 billion or $1.28 from the same quarter last year.

Apple said Mac sales in the quarter increased 9% to 4.80 million but sales in iPad business tumbled 18% to 10.9 million units.

The company’s iPhones sales in the quarter climbed 35% to 47.5 million from 35.2 million in the same period a year ago.

For the quarter, revenues in America climbed 15% year-over-year to $20.2 billion and Europe revenue jumped 19% to $10.3 billion. Revenues in Greater China surged 112% to $13.2 billion and revenues in Japan advanced by 9%.

Apple forecasted revenues for the fourth-quarter in the range of $49 billion to $51 billion and gross margin between 38.5% and 39.5%.

Boeing Co ((BA)) gained 1.5% or $2.22 to $147.22 after the aerospace company said sales in the second-quarter ending in June jumped 11% to $24.54 billion from a year ago period.

Net income in the quarter plunged 33% to $1.11 billion or $1.59 per diluted share compared to $1.65 billion or $2.24 from the same quarter last year.

For the year, Boeing forecasted revenues in the range of $94.5 billion to $96.5 billion but diluted earnings per share to drop between $7.60 and $7.80 compared to previous guidance of $8.10 to $8.30.

Microsoft Corporation ((MSFT)) slumped 2.8% or $1.33 to $45.94 after the software products and services reported revenues in the fourth-quarter ending in June declined 5% to $22.18 billion from a year ago period.

Net in the quarter swung to a loss of $3.20 billion or 40 cents per diluted share compared profit of to $4.61 billion or 55 cents from the same quarter last year.

For the quarter, the company recorded impairment charge of about $7.5 billion related to write-down of Nokia Devices and Services acquisition and $780 million restructuring charge due to job cuts.

Microsoft said devices and consumer segment revenue plummeted 13% to $8.7 billion and total Xbox revenue climbed 27% but surface revenue soared 117% to $888 million. Cloud revenues surged 88% and while phone hardware revenue plunged 38%.

European Markets

European markets turned lower led by a decline in technology stocks after Apple Inc reported lower than expected quarterly sales.

In London trading, FTSE 100 index dropped 101.02 or 1.5% to 6,668.05 and in Frankfurt the DAX index decreased 0.9% or 109.12 to 11,496.49.

In Paris, CAC 40 index slipped 0.6% or 30.87 to 5,075.59.

ARM Holdings Plc declined 4.7% to 990.39 pence after the U.K.-based microprocessors maker said revenues in the first-half ending in June soared 22% to £456 million form £373.7 million in a year ago period.

Net profit in the period surged 37.7% from a year ago to £162.1 million compared to £117.7 million and diluted earnings per share increased to 11.4 pence from 8.3 pence.

easyJet Plc increased 3.8% to 1,729 pence after the U.K.-based low-cost airline company reported total revenue in the third-quarter ending June fell 1% to £1.23 billion form £1.25 billion in a year ago period.

The budget airline said capacity climbed 4.7% to 20.8 million seats and the number of earned seats jumped 6.2% to 19.1 million from a year ago period.

The airline company added revenue per seat dropped 5.4% to £59.08 per seat, but above the May guidance.

For the year, the company forecasted pre-tax profit for the year ending in September to soar in the range of £620 million to 660 million compared to £581 million reported in a year ago.

Asian Markets

Nikkei average dropped more than 1% following weak closings in international markets. Mitsui Chemicals lifted its first-half sales outlook. Toshiba Corp trimmed its stake in Finland-based Kone Oyj.

Market indexes in Tokyo declined more than 1% following weak closings in New York and in Europe.

The Nikkei 225 Stock Average dropped 248.30 or 1.2% to 20,593.67 and the broader Topix index decreased 18.51 to 1,655.37.

The yen closed at 123.73 against a dollar.

Mitsui Chemicals, Inc soared 12.4% to 482 yen after the chemicals manufacturer revised its net sale forecast for the first-half in September to jump 4.3% to 730 billion yen from earlier estimate of 700 billion yen.

The chemicals maker said estimated profit for the period to surge 260% to 18 billion yen compared to previous guidance of 5 billion yen.

Toshiba Corporation slipped 1.7% to 393.10 yen after the diversified company agreed to sell 24.19 million shares or 4.6% stake at a price of €35.75 per share in Finland-based elevator and escalator maker Kone Oyj for a total of about 1.18 billion yen or €864.7 million or approx $947 million.

However, Kone will hold 19.9% stake in Toshiba Elevator and Building Systems.

Stocks in Mumbai traded higher and Reliance Industries surged more than 4% in anticipation of higher earnings on Friday.

Rupee weakened 4 paisa to 63.60 against one U.S. dollar.

The Sensex Index jumped 322.79 or 1.2% to close at 28,504.93. The CNX Nifty increased 104.05 or 1.2% to 8,633.50.

Sensex in Mumbai traded at a 3-month high on a surge in energy sector stocks.

Idea Cellular said quarterly profit climbed 28%. JSW Energy net declined 15%. Bajaj Finance profit surged 30% on 33% increase in revenues.

PVR jumped 5%. Cairn India net declined 24%.