- POSTED: 07 May 2014 06:07
US stocks retreated on Tuesday as a sell-off in Twitter revived worries about the tech sector and disappointing earnings from insurer AIG hit financial stocks.
NEW YORK: US stocks retreated on Tuesday as a sell-off in Twitter revived worries about the tech sector and disappointing earnings from insurer AIG hit financial stocks.
The Dow Jones Industrial Average fell 129.53 points (0.78 per cent) to 16,401.02.
The broad-based S&P 500 dropped 16.94 points (0.90 per cent) to 1,867.72, while the tech-rich Nasdaq Composite Index lost 57.30 points (1.38 per cent) at 4,080.76.
Twitter plunged 17.8 per cent after the end of a lockup period for early shareholders, enabling them to sell their shares for the first time since the company's November initial public offering.
Peter Cardillo, chief market economist at Rockwell Global Capital, said a 27.1 per cent fall in earnings at AIG sparked selling in Bank of America (-2.3 per cent), JPMorgan Chase (-1.6 per cent) and other banks. AIG shares fell 4.1 per cent.
"It's one of those days when the market wanted to focus on some of the negatives rather than the positives, the negatives being some of the company news," Cardillo said.
Dow member Merck announced the sale of its non-prescription business to Germany's Bayer for $14.2 billion. The transaction includes leading brands such as allergy medication Claritin and sunscreen Coppertone.
Merck announced the sale at an investor day that drew mixed reviews. While Credit Suisse praised the Bayer transaction, it spotlighted concerns about the company's pipeline of new drugs and the "low priority" given to shareholder returns. Merck shares fell 2.6 per cent.
Pharmaceutical giant Pfizer, also in the Dow, lost 1.8 per cent as AstraZeneca outlined its targets for long-term revenue growth as it bolsters its argument for opposing Pfizer's takeover bid. US-traded shares of AstraZeneca lost 0.9 per cent.
The French government said it opposed General Electric's acquisition of Alstom's energy business in the deal's current form and that it wants the deal to be reconfigured into a "balanced partnership" between the companies. GE shares lost 1.5 per cent.
Office Depot surged 15.8 per cent higher on earnings of seven cents per share, four cents better than analyst forecasts. The company also announced it was closing at least 400 stores by the end of 2016 as it reconfigures assets following its acquisition of OfficeMax.
Bond prices rose. The yield on the 10-year US Treasury dipped to 2.60 per cent from 2.61 per cent Monday, while the 30-year declined to 3.38 per cent from 3.41 per cent. Bond prices and yields move inversely.