Once-favored tech companies lead stock market lower; Nasdaq plunges 2.6%
NEW YORK — A slump in Internet and other technology stocks pulled the broader market lower on Friday, as traders turned on the same companies they flocked to earlier this year. Google, Netflix and other pillars of the Internet economy took a beating.
It was a bad day in an otherwise decent week. The Standard & Poor's 500 index ended the week slightly higher.
Mixed signals in the government's monthly jobs report gave investors little direction. The government said that employers added more workers to their payrolls last month, but the overall report presented a mixed picture and the unemployment rate remained at 6.7 percent.
The stock market crept higher to start, began losing steam at lunchtime and then turned lower in the afternoon. The jobs report wasn't the culprit, said Uri Landesman, president of the hedge fund Platinum Management. It is likely that the “momentum” traders, people who chased high-flying stocks, are having a change of heart, he said.
Tech stocks had soared over the past year, pushing the Nasdaq composite index up 28 percent, as traders piled into Internet and biotechnology companies. Netflix and Facebook, for instance, doubled in price over that time.
“It's like (traders) took a look at some of these high-flying Internet companies and said, ‘How can I justify these prices?' ” Landesman said.
The technology-heavy Nasdaq composite index plunged 110.01 points, or 2.6 percent, to close at 4,127.73, its biggest one-day drop since February.
The S&P 500 index fell 23.68 points, or 1.3 percent, to 1,865.09. The Dow Jones industrial average dropped 159.84 points, or 1 percent, to 16,412.71.
Utilities, which investors buy to play it safe and collect dividend payments, bucked the overall market and edged higher. Coca-Cola, Johnson & Johnson and other big corporations whose stocks are often less volatile than the broader market also made gains. Coca-Cola climbed 15 cents, or 0.4 percent, to $38.22.
Before the market opened on Friday, the Labor Department reported that employers added 192,000 jobs in March. That's less than economists had expected and below February's total of 197,000. On the bright side, employers added a combined 37,000 more jobs in February and January than the government first estimated. A half-million Americans started looking for work last month, and many of them found jobs.
Earlier in the week, a string of reports on manufacturing and hiring nudged the stock market to its record highs. Robert Pavlik, chief market strategist at Banyan Partners, said many investors have argued that tough winter weather held the economy back at the start of the year and that things would turn around as temperatures rose.
The jobs report, Pavlik said, didn't support their case. “A lot of what people have been saying about payrolls isn't true,” he said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Sprint cancels Framily, rolls out new data pricing plan
- Government may be trying to force FedEx into settlement, experts say
- HTC to construct Windows version of flagship phone
- Former Microsoft CEO Ballmer exits board of directors
- Designer sues Barnes & Noble over backpack profits
- Housing starts jump 15.7% to 8-month high, suggesting recovery back on track
- Milk producer to ax disputed ingredient
- Cash stash bolsters U.S. Steel
- Upbeat earnings, housing reports pump up stock market
- Kennametal’s CEO to retire at yearend
- Dick’s beats expectations, but golf sinks profits