By Wallace Witkowski, MarketWatch , Ryan Vlastelica
Twitter sees biggest 1-day drop since October as user growth
disappoints
U.S. stocks dropped from all-time highs Thursday, with the
Nasdaq and S&P 500 falling into negative territory, as tech
stocks gave up early gains inspired by another round of largely
upbeat corporate earnings that included well-received results from
Facebook Inc.
The S&P 500 fell 9 points, or 0.4%, to 2,469, as industrials
fell 0.8%, health-care stocks fell 0.9%, and tech stocks dropped
1.1%, after the index touched an intraday record of 2,484.04.
Earlier in the session, the tech sector was up as much as 0.6%.
The Nasdaq Composite Index fell 51 points, or 0.8% to 6,371,
after touching an intraday record of 6,460.84.
The Dow Jones Industrial Average remained in positive territory,
up 23 points, or 0.1%, at 21,734, as Verizon Communications
Inc.(VZ) shares soared 7.6% and Merck & Co.(MRK) shares rallied
3.4%. Apple Inc. (AAPL) shares weighed on the index with a 2.7%
decline. Earlier, the blue-chip average set an intraday record of
21,790.13.
Stocks pulled back in midday trading as gains in tech stocks
swung to losses.
"After Facebook earnings, people are getting jittery about
valuations so there's a rebalancing going on," said Diane Jaffee,
senior portfolio manager at TCW. Jaffee added that the broad weight
upon tech stocks, as shown by the drop in Apple, was likely
exchange-traded fund driven, and not a singling out of any
particular tech name.
After rising more than 5% earlier, Facebook(FB) shares were up
3.2% a day after the social media giant posted results that beat
quarterly earnings expectations
(http://blogs.marketwatch.com/thetell/2017/07/26/facebook-earnings-put-instagram-in-focus-amid-shift-in-newsfeed-ads-live-blog/).
The company could be nearing a $500 billion market cap
(http://www.marketwatch.com/story/facebook-heads-toward-500-billion-market-cap-after-earnings-2017-07-26)
if shares maintain their strength throughout the session. The stock
has already jumped nearly 50% thus far this year.
Facebook is one of the so-called FAANG stocks, a reference to
the quintet of technology and internet names (Facebook, Apple,
Amazon (AMZN), Netflix (NFLX), and Google parent Alphabet
(GOOGL)(GOOGL) that have driven market returns thus far this year.
However, those sharp gains have also raised questions over
valuations.
"These are the points where people take profits," said Mark
Kepner, managing director of sales and trading at Themis Trading.
Plus, with the pressure coming midsession a toning down of volume
can amplify moves, Kepner said.
A drop in the Dow Jones Transportation Average , which was down
3%, also offered a signal for an equities pullback.
"There has been a marked divergence between Dow Transports and
Dow Industrials and whenever this happens people like to reduce
risk," said Ian Winer, head of the equities division at Wedbush
Securities. "And the best way to reduce risk right now is by
selling overvalued tech stocks."
Read:Next stop for Facebook shares? $200, say analysts
applauding results
(http://www.marketwatch.com/story/next-stop-for-facebook-shares-200-say-analysts-applauding-results-2017-07-27)
Read:Facebook keeps warning about growth, but growth doesn't
stop
(http://www.marketwatch.com/story/facebook-keeps-warning-about-growth-but-growth-doesnt-stop-2017-07-26)
Among other corporate results, Procter & Gamble Co.(PG) rose
1.1% after the Dow component posted a fourth-quarter profit that
was above expectations
(http://www.marketwatch.com/story/procter-gamble-shares-edge-up-following-q4-earnings-beat-2017-07-27).
United Parcel Service Inc. (UPS) also fell 3.9% despite its results
topping consensus forecasts
(http://www.marketwatch.com/story/ups-shares-rise-as-earnings-beat-estimates-2017-07-27).
MasterCard Inc.(MA) also reported stronger-than-expected
earnings
(http://www.marketwatch.com/story/mastercard-beats-estimates-as-consumer-spend-more-2017-07-27)
and revenue for the second quarter as consumers boosted their
spending. Shares were 2.3% lower.
Twitter (TWTR) tumbled 14% after the microblogging platform
reported lackluster user growth. The stock is on track for its
biggest one-day decline since October.
Comcast Corp.(CMCSA) posted profit and revenue that beat
analysts expectations
(http://www.marketwatch.com/story/comcast-profit-revenue-beat-analysts-expectations-2017-07-27),
and shares fell 0.9%.
PayPal Holdings Inc.(PYPL) shares fell 0.3% after the mobile
payment group topped earnings views and raised guidance
(http://www.marketwatch.com/story/paypal-shares-up-2-after-company-tops-views-raises-guidance-2017-07-26).
After the market close, Amazon.com Inc.(AMZN) is scheduled to
report its quarterly results
(http://www.marketwatch.com/story/amazon-earnings-with-a-dominant-position-in-the-us-analysts-look-abroad-2017-07-25),
along with Expedia Inc. (EXPE), Intel Corp.(INTC), Starbucks
Corp.(SBUX) and Mattel Inc.(MAT).
Overseas companies with U.S.-listed shares were also active.
AstraZeneca PLC(AZN.LN) (AZN.LN) sank 15% after the drug
heavyweight reported a negative result in a Phase 3 clinical trial
of its lung-cancer treatment Mystic
(http://www.marketwatch.com/story/astrazenecas-mystic-cancer-drug-trial-fails-2017-07-27).
(http://www.marketwatch.com/story/astrazenecas-mystic-cancer-drug-trial-fails-2017-07-27)
Shares of rival Bristol-Meyer Squibb Co.(BMY) fell 2.9% after its
results.
Anheuser-Busch InBev NV(ABI.BT) (ABI.BT) moved 5.5% higher after
the brewing giant posted a surge in quarterly profit
(http://www.marketwatch.com/story/ab-inbev-profit-up-despite-drop-in-us-market-share-2017-07-27).
(http://www.marketwatch.com/story/ab-inbev-profit-up-despite-drop-in-us-market-share-2017-07-27)And
the world's largest liquor maker Diageo PLC(DEO) soared 5.2% after
lifting its target for profit margin growth
(http://www.marketwatch.com/story/diageo-full-year-earnings-lifted-by-currency-boost-2017-07-27).
Economic data: The number of Americans who applied for
first-time unemployment benefits rose in late July but remained
near the lowest level in decades
(http://www.marketwatch.com/story/us-jobless-claims-climb-10000-to-244000-2017-07-27).
Separately, orders for durable or long-lasting U.S. goods soared
6.5% in June
(http://www.marketwatch.com/story/boeing-bonanza-durable-goods-orders-soar-65-in-june-2017-07-27).
Other markets: European stocks traded mixed
(http://www.marketwatch.com/story/european-stocks-search-for-direction-in-busy-session-for-earnings-2017-07-27)
as investors absorbed a heavy stream of earnings, while in Asia ,
equity markets were broadly positive
(http://www.marketwatch.com/story/asia-stocks-broadly-positive-nikkei-lifted-by-nintendo-2017-07-27).
Gold prices rose 0.9%, with precious and base metals rising
across the board, while oil prices advanced 1%.
The ICE Dollar Index rose following an earlier decline, and was
last trading up 0.3% at 93.90. The dollar weakened on Wednesday,
after some analysts viewed the Federal Reserve as striking a dovish
tone in its policy statement
(http://www.marketwatch.com/story/fed-to-wind-down-bond-holdings-relatively-soon-2017-07-26).
--Barbara Kollmeyer in Madrid and Anora Mahmudova in New York
contributed to this report.
(END) Dow Jones Newswires
July 27, 2017 14:30 ET (18:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.