Tech stocks fall amid Apple earnings slump
Tech stocks were felled by a rare earnings miss at Apple, Inc. The Dow fell 72 points to 11504 after trading high for most of the day, as Apple's poor earnings results helped drag down tech stocks.
A rare earnings miss by Apple pulled down tech stocks Wednesday. Broad market indexes turned lower in late afternoon trading on reports of an impasse in talks to resolve Europe's debt crisis.
The leaders of Germany, France, the International Monetary Fund and the European Central Bank met Wednesday in preparation for a summit scheduled for this weekend. Markets sank and the price of oil fell after a report came out that France's President Nicolas Sarkozy said Germany and France were in a deadlock over how to expand an emergency fund.
The Dow closed at 11,504.62, a loss of 72.43 points, or 0.6 percent. On Tuesday the Dow closed half a point below where it started the year.
"The big theme this week is what's going to happen in Europe over the weekend," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "If a Greece or another country defaults, it could do real damage to Europe. If that pushes Europe into a recession, it will further clip the pace of global growth."
The Dow had traded higher for most of the day but started to slump shortly before 2 p.m., when the report of the impasse came out. Within an hour it was down 88 points.
Citigroup and other banks turned lower. It was the latest in a series of sudden turns for the market. Shifting expectations for the Oct. 23 meeting have rattled markets every day this week.
Apple Inc. slumped 5.6 percent after the company's income and revenue fell short of forecasts. It was a rare miss for the company, which had jumped 31 percent this year through Tuesday. Apple blamed the shortfall on a later-than-usual release of its newest iPhone.
Worries that Europe's troubles could get worse have kept markets on edge. The Greek government is widely expected to go through some kind of default or restructuring of its debt. If that process becomes messy, European banks that hold Greek government bonds may find it difficult to raise money from other banks. That, in turn, could trigger a freeze in credit markets and deliver a blow to an already weak European economy.
Stocks slumped Monday after the German government played down hopes that Europe's debt crisis would be resolved soon. They roared back Tuesday on a report that Germany and France had reached an agreement to expand the European rescue fund.
Investors had plenty of corporate news to digest on Wednesday. Abbott Laboratories announced plans to spin off its drug business. Abbott's stock rose 1.5 percent.
Travelers Cos., a major insurer, jumped 5.7 percent after reporting revenue that beat analysts' expectations.
Large banks that were trading higher dropped in the late afternoon. Morgan Stanley edged up less than 1 percent. The bank said a jump in investment banking revenue helped it earn $1.15 a share, well above analyst expectations of 30 cents per share.
Citigroup Inc. slipped 1.6 percent. The bank agreed to pay $285 million to settle civil fraud charges that it misled buyers of complex mortgage investments just as the housing market was starting to collapse.
BlackRock Inc. dropped 4.7 percent after the money management giant said its assets under management fell 3 percent.
Airlines fell. AMR Corp., the parent of American Airlines, slid 7.5 percent after reporting a loss that was worse than Wall Street analysts predicted. The company said its fuel spending jumped 40 percent, wiping out revenue gains from higher fares and fees. JetBlue Airways Corp. dropped 6.7 percent after the company said its chief financial officer has resigned.