Wall Street lower as consumer discretionary stocks drag

April 25, 2014

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks fell on Friday, pulled lower by a decline in consumer discretionary stocks, as bellwether names Amazon.com and Ford Motor fell in the wake of their quarterly earnings.

Amazon was the S&P 500′s worst performer, down 9.3 percent, and other high-flying sectors were dropping with it. Social media names were down, with Twitter losing 7.3 percent, and biotechnology shares were again off as investors shied away from riskier sectors.

Still, the S&P 500 was virtually flat for the week with the declines, but remains within two percent of its all-time intraday high.

Amazon fell 9.5 percent to $305.21 after posting a jump in revenue, offset by sharp increases in spending. Ford Motor Co fell 3.2 percent to $15.81 after first-quarter earnings missed expectations, hurt by higher warranty costs in North America.

The two weighed on consumer discretionary stocks <.SPLRCD>, down 1.7 percent as the worst-performing S&P sector on the day.

“What that says is people are using any strength at all to raise some cash because they think the market is going to test lower,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.

Investors also continued to pay attention to geopolitical strife over Ukraine, creating some nervousness heading into the weekend. U.S. President Barack Obama and four European allies agreed Friday Russia failed to live up to terms of the Ukraine peace accord, and would coordinate on a response to “impose costs” on Russia, the White House said.

While the situation has taken a backseat to corporate earnings recently, investors remain on edge over the possible result of escalating tensions. Visa Inc late Thursday said U.S. sanctions on Russia were hurting its card transaction volumes. Shares fell 4.6 percent to $199.84 and weighed on the Dow.

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 edged up 0.3 percent to $39.98.

The Dow Jones industrial average <.DJI> fell 153.39 points or 0.93 percent, to 16,348.26, the S&P 500 <.SPX> lost 16.23 points or 0.86 percent, to 1,862.38 and the Nasdaq Composite <.IXIC> dropped 72.92 points or 1.76 percent, to 4,075.419.

While companies are clearing a lowered bar for earnings, estimates have been improving. Profits are now seen rising 3.3 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 biggest gainers after LifePoint Hospitals Inc’s results. The stock rose 5.1 percent to $56.24, Tenet Healthcare jumped 8.7 percent at $46.14 and Community Health climbed 6.6 percent at $39.87.

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

(Editing by Chizu Nomiyama and Nick Zieminski)

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