US stocks slide as investors cash in
US stocks fell yesterday as investors questioned the sustainability of the rally in light of fresh worries about earnings growth in the coming quarters.
Investors targeted recent top performers, particularly energy shares, which were also hit by a fall in oil prices. The S&P energy index dropped 2.4 per cent, while oil futures lost more than 2 per cent.
The Nasdaq was pressured by losses in Sears Holding after it said it will lose money in the first quarter. Cognizant Technology Solutions was another drag, falling on heavy volume as investors focused on its slowing growth rate.
“There is concern the market is a little overheated and some people are using the opportunity to take some profits,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.
The S&P 500 fell for a second day after hitting its highest level in nearly three years on Friday at the end of a two-week rally.
“We’ve had a great earnings season, but above that there’s not much on the horizon to further gains in stocks,” Jankovskis said.
Chinese Internet stocks fell, with search engine Baidu down 5.2 per cent to $139.84 in heavy volume ahead of the initial public offering of Chinese social networking site Renren.
Investor interest in the smaller Facebook competitor was clear last week as Renren raised the expected price range of its IPO 30 per cent to $14 from $12 per share.
Online media company SINA Corp dropped 9.5 per cent to $122.22.
The Dow Jones industrial average edged up 0.15 points to 12,807.51. The Standard & Poor’s 500 fell 4.60 points, or 0.34 per cent, to 1,356.62. The Nasdaq Composite Index lost 22.46 points, or 0.78 per cent, to 2,841.62.
Alcoa shares rose 2.6 per cent to $17.67 on market talk that Rio Tinto was lining up a bid to buy the US aluminum company. But sources said two banks rumored to be financing the deal were not involved.
Sears’s estimate of a quarterly loss late on Monday sent its shares down 9.9 per cent to $75.88. Cognizant dropped 5.7 per cent to $77.52 on its highest volume since 4 August 2009, as investors focused on its slowing growth rate.