Stocks decline as technology, consumer shares extend slide

U.S. stocks fell, after the biggest drop for the Nasdaq 100 Index in two years, as technology and consumer companies extended last week’s slide before the start of corporate earnings season. More

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Stocks decline as technology, consumer shares extend slide

Posted 4/7/14

NEW YORK – U.S. stocks fell, after the biggest drop for the Nasdaq 100 Index in two years, as technology and consumer companies extended last week’s slide before the start of corporate earnings season.

Yahoo! Inc. and Apple Inc. lost more than 1.4 percent to pace declines in technology shares. TripAdvisor Inc. tumbled 5.3 percent to lead a retreat among consumer companies.

The Standard & Poor’s 500 Index dropped 0.9 percent to 1,849.21 at 12:59 p.m. in New York, briefly erasing its gains for the year. The Dow Jones Industrial Average slipped 112.89 points, or 0.7 percent, to 16,299.82. The Nasdaq 100 gauge of the biggest technology stocks fell 0.8 percent, after tumbling 2.7 percent on April 4. The Russell 2000 Index of small companies sank 1.3 percent to an almost two-month low.

“It’s a carryover from Friday’s selloff,” said Wes Mills, chief investment officer with Scotia Private Client Group in Toronto. His firm manages about C$14 billion. “It’s a risk-off move. Markets had risen to the point where people are a little skittish and locking in profits ahead of the earnings season.”

The S&P 500 rose to a record last week before trimming its weekly gain to 0.4 percent in the last two days, as the selloff in technology shares overshadowed optimism on Federal Reserve monetary stimulus.

Technology shares were hit as traders dumped the biggest winners of the bull market amid concern valuations have advanced too far. The Nasdaq 100 fell the most in two years on April 4 with declines in all but four stocks. The gauge sank 0.9 percent for the week after surging 35 percent in 2013.

Valuations, ETFs

The Nasdaq Composite Index, which slid the most in two months on April 4, dropped 1.1 percent today. It trades at 31.5 times reported earnings of the companies in the index. That’s almost twice the ratio for the S&P 500, which trades at 17 times earnings.

The selling in the Nasdaq 100 Index has sent anxiety among options traders to the highest levels since the flash crash four years ago. More than 1 million put options on an exchange-traded fund tracking the Nasdaq index changed hands on April 4 as investors sought protection during a 2.7 percent drop in the gauge. That’s the most trading in bearish contracts since May 7, 2010, the day after $862 billion was erased from the value of U.S. stocks in a matter of minutes.

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