Goldman and Wells Fargo dampen rally

THE S&P 500 suffered its biggest decline in nearly two months yesterday as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally.

The Nasdaq fell more than one per cent, its biggest daily percentage loss since 16 November, as more disappointment in earnings came from chipmaker Cree. Its stock tumbled 14.5 per cent to $53.63.

The Dow Jones industrial average fell 12.64 points, or 0.11 per cent, to 11,825.29. The Standard & Poor’s 500 Index lost 13.10 points, or 1.01 per cent, to 1,281.92. The Nasdaq Composite Index dropped 40.49 points, or 1.46 per cent, to 2,725.36.

After the close, F5 Networks shares plummeted 20.7 per cent to $110.08 after the network equipment maker posted weaker-than-expected quarterly revenue and forecast second-quarter revenue below Wall Street’s estimates. The stock has been one of the big momentum plays during the past year and could serve to extend the sell-off yesterday. Financial and technology stocks have been driving the surge that has pushed the benchmark index up nearly 10 per cent since the start of December, which some investors believe has stocks primed for a pullback.

“Even stocks here that are beating expectations are not acting favorably so (for) the market, it may be time for a pause, and that may be what we are seeing here,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services.

A prime example was Apple, which slipped 0.5 per cent to $338.84 after the company reported a quarterly profit that blew past Wall Street’s expectations on strong sales of iPhones, iPads and Mac computers.

Goldman Sachs’s stock fell 4.7 per cent to $166.49, its biggest daily percentage decline since 30 April, after the Wall Street firm posted a 53 per cent drop in profit as trading revenue tumbled. Shares of Wells Fargo lost two per cent to $31.81 after the company posted a fourth-quarter profit that missed some analysts’ estimates.

Bucking the trend, IBM climbed 3.4 per cent to $155.69 on strong earnings after Tuesday’s close.