By Victor Reklaitis and Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks slid Monday, adding to
Friday's drop, which was led by once-highflying biotech and
Internet stocks.
Asian and European markets have joined in the tech-led slump.
With Monday's session light on economic data, investors are looking
ahead to the start of first-quarter earnings season, and some
analysts sound downbeat about the coming reports.
The S&P 500(SPX) was last down 20 points, or 1.1%, to
1,844.88, while the Dow Jones Industrial Average(DJI) shed 144
points, or 0.9%, falling to 16,267.35 after briefly turning
positive. The Nasdaq Composite(RIXF) slid 59 points, or 1.4%, to
4,068.67.
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action.
On Friday, the Nasdaq fell 2.6% for its worst drop in two
months. The tech-heavy index suffered a weekly loss of 0.7%, while
the S&P 500 and Dow managed weekly gains of 0.4% and more than
0.5%, respectively.
Compared with last week, this week is short on top-tier economic
data, so investors are likely to focus instead on earnings reports
from the first quarter. Alcoa Inc. (AA), the aluminum producer and
former Dow component, unofficially kicks off the earnings season on
Tuesday, when it reports results after the closing bell.
"The selloff of high-growth stocks on Friday spilled over to the
rest of the market for the first time and it is worrying," said
Channing Smith, managing director at Capital Advisors.
"With the economy still muddling through and earnings projected
to rise ever so slightly, there are doubts about current
valuations, especially among highflying companies on the Nasdaq,"
he added.
"The weakness has carried over from Friday. It is hard to
imagine how the SPX went from a new all-time high to down on the
year in just two days, but it happened. The momentum names and
technology names were the first to crack, now we are seeing signs
that weakness is moving to the overall market," said Ryan Detrick,
senior technical strategist at Schaeffer's Investment.
Other analysts have said they're a little skeptical of the
naysayers, adding that this will be the 16th quarter or so in a row
where we are being cautioned about earnings.
Among individual stocks on Monday, Internet names TripAdvisor
Inc.(TRIP) and Baidu Inc. (BIDU) were among the Nasdaq's worst
performers. They're down 5.2% and 5.4%, respectively, adding to
their recent losses.
On the plus side, Questcor Pharmaceuticals Inc.(QCOR) surged 15%
after news that Mallinckrodt (MNK) will buy the drug maker for
about $5.6 billion. (Read more in the Movers & Shakers column
http://www.marketwatch.com/story/questcor-surges-on-buyout-mannkind-sinks-2014-04-07.).
Peabody Energy Corp. (BTU) shares rose 0.4% after the stock's
rating was raised to outperform from market perform at Cowen &
Co. last week.
Netflix Inc. (NFLX) shares fell 0.6%, adding to a 4.9% drop on
Friday. Pandora Media, Inc. (P) dropped 8.5%. Netflix and Pandora
are one of the handful of momentum stocks that got caught up in
Friday's rout.
In other markets, Asian and European stock markets lost ground
Monday. The dollar (DXY) edged lower, and oil prices fell, with
Brent taking the biggest hit on reports that Libya may soon reopen
two oil ports. Gold futures dipped and traded below $1,300 an
ounce.
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