NEW YORK • US stocks fell in early trading yesterday, with the tech-heavy Nasdaq composite falling more than 1 per cent after disappointing results from technology giants, including Apple, the world's largest publicly traded company.
Computer and software shares, including Microsoft and Yahoo, had tumbled on Tuesday, five days after Google's earnings spurred the largest one-day wealth creation by any United States stock.
The Nasdaq Composite Index rallied to an all-time high on July 17 after Google surged 16 per cent, adding US$65 billion (S$88.8 billion) to its market capitalisation. Yesterday, however, it slid 43.85 points, or 0.84 per cent, to 5,164.28 at 9.47am in New York. The Standard & Poor's 500 Index erased 5.48 points, or 0.26 per cent, at 2,113.73 while the Dow Jones industrial average was down 21.68 points, or 0.12 per cent, at 17,897.61.
"It seems that the expectations are a little bit too high on the tech sector," said Mr Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. "The last weeks have been pretty good for the markets and everyone was a little over-excited, so it seems we're going to be a bit more cautious over the next couple of days."
Cracks in the facade appeared before Tuesday.
Apple, the world's most valuable company, slid almost 7 per cent in late trading, a slump that would wipe more than US$50 billion from its value. It traded 5.1 per cent lower in yesterday's pre-market.
Shipments of iPhones for the fiscal third quarter and the company's revenue forecast for the current period missed analysts' projections, raising questions over whether demand for the device has peaked.
Adding to the bad news in the tech sector, Microsoft fell 3.1 per cent following its largest-ever quarterly net loss, hurt by a US$7.5 billion writedown after the purchase of Nokia's handset unit failed to rescue the company's mobile business.
Yahoo fell 2.9 per cent after forecasting sales in the current quarter below analysts' estimates, a sign that chief executive Marissa Mayer's turnaround effort is still a work in progress.
International Business Machines Corp dropped 5.9 per cent during regular trading on Tuesday after sales fell for a 13th quarter.
At the start of the year, analysts forecast the technology sector would deliver a 13 per cent increase in profit during the second quarter, according to a Bloomberg survey. Those expectations were lowered to a 2.4 per cent gain as at July 17.
Intel Corp, kicking off earnings by the largest US technology companies last week, said it expects the personal-computer market to fall further than expected, spotlighting the challenges for chipmakers.
Of those that have reported so far, about three quarters beat earnings estimates and 55 per cent have topped sales estimates.