Wall Street lower on earnings; Amazon weighs on Nasdaq

Reuters

 

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks fell on Friday as a number of bellwether names, including Amazon and Ford, fell following their quarterly results, overshadowing positive numbers from Microsoft.

Despite the decline on the day, the S&P 500 is on track for its second straight week of gains and it is 1.4 percent away from its all-time high.

Investors also continued to pay attention to intensifying geopolitical strife after Ukrainian forces killed up to five pro-Moscow rebels and Russia launched army drills near the border. The actions raised fears Russian troops would invade. Separately, local police said seven people were injured overnight at a pro-Ukrainian checkpoint near the Black Sea port of Odessa when an explosive device blew up.

While the situation has taken a backseat to corporate earnings in recent weeks, investors remain on edge over what the potential fallout could be from any prolonged tension. Visa Inc late Thursday said U.S. sanctions on Russia were hurting its card transaction volumes. Shares fell 4.4 percent to $200.25.

"Ukraine is starting to weigh on the market after being ignored for so long. I don't think it will be a long-lasting issue, and it creates opportunities in the oil and gas space, but we were overbought yesterday, so it is another reason for investors to take profits," said Chris Bertelsen, chief investment officer of Global Financial Private Capital in Sarasota, Florida.

Amazon fell 9 percent to $306.80 after posting a jump in revenue, offset by sharp increases in spending. Ford Motor Co fell 2.9 percent to $15.85 after first-quarter earnings missed expectations, hurt by higher warranty costs in North America.

On the upside, Microsoft Corp's earnings topped analyst forecasts, while investors were cheered by the software giant's new emphasis on mobile and cloud computing. Shares rose 1.5 percent to $40.46.

"I appreciate the growth side of Amazon, but this is a reaction to the fact that you can only go so long without growing profits," said Bertelsen, who helps oversee $3.5 billion in assets. "Still, older tech like Microsoft still looks cheap."

The Dow Jones industrial average was down 91.09 points, or 0.55 percent, at 16,410.56. The Standard & Poor's 500 Index was down 7.10 points, or 0.38 percent, at 1,871.51. The Nasdaq Composite Index was down 37.72 points, or 0.91 percent, at 4,110.62.

While companies are clearing a lowered bar for earnings, estimates have been improving. Profits are now seen rising 2.9 percent this quarter, down from the 6.5 percent growth rate estimated at the start of the year, but above the low of 0.6 percent seen last week, according to Thomson Reuters data.

Healthcare names were among the day's biggest gainers after LifePoint Hospitals Inc reported results. The stock rose 4.6 percent to $55.95 while Tenet Healthcare was up 5 percent at $44.38 and Community Health was up 4.1 percent at $38.96.

In the latest economic data, U.S. consumer sentiment rose more than expected in April, moving to a nine-month high, according to the Thomson Reuters/University of Michigan index. But the U.S. services sector expanded at a slower rate as job creation decelerated.

 

(Editing by Chizu Nomiyama and Nick Zieminski)

 

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