NEW YORK, July 21: Wall Street fell hard on Friday as disappointment over quarterly reports from tech giants Google and Microsoft prompted a pullback a day after the Dow blue-chip index topped 14,000.
The Dow Jones Industrial Average sank 149.33 points (1.07 per cent) to close at 13,851.08 a day after the first close ever above 14,000 for the blue-chip index.
The tech-heavy Nasdaq tumbled 32.44 points (1.19 per cent) to 2,687.60 and the broad-market Standard & Poor's 500 index pulled back from its record, dropping 18.98 points (1.22 per cent) to 1,534.10.
The market was digesting earnings reports late Thursday from tech giants Google and Microsoft, details of which fell short of Wall Street expectations.
Google never disappoints. Except this quarter, said Dick Green, analyst at Briefing.com.
Green said Google's per share earnings, which were shy of expectations, ranks as a major disappointment Microsoft isn't helping either, he added. Even though the world's biggest software firm reported profits in line with forecasts and revenues above expectations, he said, guidance for the next quarter and the full year was very consistent with current Wall Street forecasts. The report wasn't bad, but apparently it also wasn't good enough. Concerns on the real estate front resurfaced after St. Louis Federal Reserve president William Poole said the subprime market “clearly is large enough to affect aggregate homebuilding activity and consumer spending.Al Goldman at AG Edwards said the mood was also dampened by a report that a glut of condominiums in Miami is pushing Florida's economy to the brink of recession. Homebuilding stocks are weak again today. Among stocks being watched, Google slid 28.47 dollars or 5.2 per cent to $514.37 after posting a profit of 925 million dollars but also revealing higher costs of hiring and bonuses.
Microsoft fell 35 cents or two per cent to 31.16 after it met market expectations with its latest quarterly report, closing out its fiscal year with a profit of $14.06 billion.
Elsewhere, Citigroup shed 40 cents to $50.73 as the biggest US financial group reported a record quarterly profit of $6.23 billion Friday as it reaped lucrative investment banking returns and international revenues.
Dow component Caterpillar, however, was among the downside leaders, tumbling $3.78 or 4.4 per cent to 78.86 after the maker of earth-moving equipment said its profit sank 21 per cent to $823 million, short of Wall Street estimates.
Bonds meanwhile rallied in a flight to safety from subprime mortgage woes.
The yield on the 10-year US Treasury bond fell to 4.956 per cent from 5.028 per cent Thursday and that on the 30-year bond eased to 5.064 per cent from 5.118 per cent. Bond yields and prices move in opposite directions.---AFP