US stocks fall as Apple, Microsoft tumble

Traders focused on revenue and sales forecasts for Apple that fell shy of expectations.
Traders focused on revenue and sales forecasts for Apple that fell shy of expectations.EPA

NEW YORK (AFP) - Shares of Apple tumbled 4.3 per cent and Microsoft fell 3.7 per cent as disappointing earnings from the two technology titans weighed Wednesday on the broader market.

The Dow Jones Industrial Average fell 68.25 points (0.38 per cent) to 17,851.04.

The broad-based S&P 500 dropped 5.06 (0.24 per cent) to 2,114.15, while the tech-rich Nasdaq Composite Index sank 36.35 (0.70 per cent) to 5,171.77.

Apple reported that net income for the quarter ending June 27 jumped 38 per cent to US$10.7 billion (S$14.6 billion).

But traders focused on a revenue forecast that fell shy of expectations and commentary from some analysts that the 47.5 million iPhones sold missed expectations.

Deutsche Bank said the market's reaction to Apple's results showed "it's getting harder to beat the bulls."

Microsoft reported a loss of US$3.19 billion due to a hefty write-down on the smartphone business it acquired from Nokia and restructuring charges of nearly a billion dollars.

Dow member Caterpillar fell 3.2 per cent after the company reported lower equipment sales in most of its businesses in the second quarter. The industrial giant will issue its full earnings report Thursday.

Baker Hughes dropped 3.9 per cent on a Bloomberg News report that its US$34.6 billion sale to Halliburton could be blocked on antitrust grounds. Halliburton fell 0.8 per cent.

Other oil services companies also fell as US crude prices closed under US$50 a barrel for the first time since April 2.

Weatherford International lost 3.9 per cent, Nabors Industries shed 2.5 per cent and Cameron International fell 5 per cent.

Banking stocks rose, including Dow member JPMorgan Chase (+1.4 per cent) and Bank of America and Citigroup (both +2.1 per cent).

Yahoo fell 1.2 per cent after reporting a US$22 million loss in the second quarter as chief executive Marissa Mayer warned earnings could be pressured in the coming quarter due to heavy investment in new products.

Aerospace giant Boeing rose 1 per cent after second-quarter earnings translated into US$1.62 per share, 25 cents above analyst expectations.

Other companies to report earnings included Chipotle Mexican Grill (+7.8 per cent), Dow member Coca-Cola (-0.7 per cent), GoPro (-0.6 per cent), Illumina (-8.4 per cent) and Whirlpool (+7.3 per cent).

Bond prices rose. The yield on the 10-year US Treasury fell to 2.33 per cent from 2.34 per cent Tuesday, while the 30-year fell to 3.04 per cent from 3.08 per cent. Bond prices and yields move inversely.