US indexes fall off record highs

Associated Press

NEW YORK

U.S. stock indexes pulled back from their record highs Thursday after an afternoon swoon for technology companies helped overshadow another big day for telecoms.

Stocks had been on track for another quiet day of gains in a year full of them, but Apple, Microsoft and other technology stocks suddenly changed direction in the afternoon. After being up as much as 0.6 percent in morning trading, tech stocks in the S&P 500 finished the day down 0.8 percent. It was the worst performance among the 11 sectors that make up the index.

Software company CA had the biggest loss in the S&P 500 and fell $3.55, or 10.2 percent, to $31.10. It began to plunge around noon, following reports that merger talks between it and BMC Software have ended.

F5 Networks was another tech stock that helped lead the S&P 500 lower. It reported weaker revenue for the latest quarter than analysts expected and gave a forecast for earnings this quarter that fell short of some analysts’ forecasts. Its stock lost $9.18, or 7.2 percent, to $119.02.

Close to half of the companies in the S&P 500 have reported their earnings for the latest quarter, and the results have been mostly encouraging. Not only are profits growing, so are revenues for many companies.

But expectations were high coming into the reporting season, and shares rallied accordingly. Now, companies’ stocks are getting less of a boost than usual when they report earnings that are above analysts’ forecasts, said Nate Thooft, senior portfolio manager at Manulife Asset Management.

“And for those few that are disappointing, they’re getting penalized significantly,” Thooft said. Stock prices are dropping more than usual when companies fall short of expectations, he said.

Twitter dropped $2.77, or 14.1 percent, to $16.84. It reported better-than-expected quarterly results, but it also said that its monthly average user base did not grow from the prior quarter.

Health care stocks were also weak, and drugmaker AstraZeneca sank after it said its lung cancer drug Imfinzi did not reach its goals in a clinical trial.