U.S. stocks fell, pulling the Standard & Poor’s 500 Index down from a record, as earnings at Amazon.com Inc and Visa Inc. missed estimates and durable goods data fueled concern corporate investment remains stop-and-go.
Amazon plunged 9.7 percent after trailing analysts’ predictions for the second successive quarter. Visa sank 3.7 percent percent after lowering its full-year revenue forecast. Pandora (P:US) Media Inc. slid 10 percent after the number of active listeners reported by the biggest Internet radio service missed some analysts’ estimates. Baidu Inc. rose 11 percent after earnings topped projections.
The S&P 500 slipped 0.5 percent to 1,978.34 at 4 p.m. in New York. The Dow Jones Industrial Average lost 123.23 points, or 0.7 percent, to 16,960.57 today. About 5 billion shares changed hands on U.S. exchanges today, 12 percent below the three-month average.
“The market is really looking at micro level numbers on a lot of these companies,” Ian Kerrigan, global investment specialist at JP Morgan Private Bank in Seattle, said in a phone interview. “There is skepticism going into the weekend. We have a lot of important numbers coming out next week with GDP, inflation and jobs, so we might see some profit-taking today.”
Goldman Sachs Group Inc. said equities are at risk of a temporary selloff, citing rising bond yields and high valuations for lowering its rating on stocks.
The S&P 500 closed little changed for the week. The gauge was up 0.5 percent over the past four days as corporate earnings reports boosted confidence in the economy and inflation data signaled the Federal Reserve won’t be compelled to raise interest rates in the near future. The Fed announces its next policy decision at the conclusion of a two-day meeting on July 30.
Fed Chair Janet Yellen said last week the central bank must press on with stimulus with record easing to combat persistent weakness in the job market. A report on Aug. 1 will show employers added 231,000 jobs in July and the unemployment rate held at 6.1 percent, according to economists in a Bloomberg survey.
The S&P 500 has advanced 7 percent this year, as the U.S. economy shows signs of recovering from a 2.9 percent contraction in the first quarter. Investors will get a reading on second-quarter growth on July 30.
Data today showed orders for U.S. business equipment rose in June following a revised drop the prior month, indicating corporate investment could hold back growth.
“Durable goods orders continue to be anemic relative to where they should be in the capex cycle,” Lincoln Ellis, managing director at Green Square Capital Management LLC in Memphis, Tennessee, said in a phone interview. “CEOs in America are very cautious about reinvesting in capital expenditures because they understand the underlying economy continues to be lackluster.”
Investors have also been watching geopolitical tensions in the Middle East and Ukraine. The U.S. today accused Russia of shelling Ukrainian military positions across its border, raising tensions after the ruling coalition in Kiev broke apart.
Russia’s central bank unexpectedly increased borrowing costs for a third time this year as the intensifying conflict and the threat of wider sanctions squeeze the economy and undercut the ruble.
Israel and Hamas are considering a U.S.-backed proposal for a temporary cease-fire as the conflict in the Gaza Strip intensified.
Goldman Sachs cut its rating on stocks to neutral, the equivalent of hold, for the next three months, according to a quarterly research report from its portfolio strategy group on July 25.
“The acceleration in economic growth is largely behind us and geopolitical risks are elevated,” a group of 11 strategists, including David Kostin, Kathy Matsui and Peter Oppenheimer, said in the report, known as the global opportunity asset locator.
Eleven companies on the S&P 500 reported earnings today. Of the members that have posted results so far, 79 percent have beaten estimates for profit and 66 percent have exceeded projections for sales.
“The results season has been going fine, not spectacular, but fine,” Matthew Beesley, head of global equities at Henderson Global Investors Holdings Ltd., said. “There’s a worry that growth is slowing worldwide, so people have been watching corporate data very closely. It’ll be the financial results that will be moving markets, as none of the geopolitical events going on right now have much effect.‘‘
The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, rose 6 percent to 12.55 to erase a decline for the week.
Eight of the 10 main S&P 500 groups retreated today. Consumer-discretionary shares, a sector that includes Amazon (AMZN:US), sank 1.2 percent to pace declines and financials lost 0.6 percent as a group.
Amazon tumbled 9.7 percent, the most since April. The world’s largest online retailer reported a second-quarter loss of $126 million, compared with the average estimate by analysts for $66.7 million, as its cloud-computing business showed signs of cooling and investments in new distribution warehouses and gadgets curtailed earnings.
‘‘I’m not overly concerned with Amazon’s losses,” said Patrick Spencer, managing director and head of U.S. equity sales at Robert W. Baird & Co. “They’re focusing on building a business rather than reaping short-term earnings.”
Visa dropped 3.6 percent. The world’s largest payments network said revenue for the accounting year ending Sept. 30 may climb 9 percent to 10 percent from a year earlier. That’s lower than an April forecast of 10 percent to 11 percent.
Pandora lost 10 percent for the steepest drop in three months. The number of active listeners grew 7.5 percent to 76.4 million users in the second quarter, the company said yesterday. That missed the 76.6 million estimate of Corey Barrett, an analyst at Pacific Crest Securities, and a projection of 77 million by Mark Mahaney at RBC Capital Markets.
Baidu advanced 11 percent, rising for a sixth day to extend an all-time high. The operator of China’s largest Internet search service reported second-quarter net income of 3.55 billion yuan ($572.5 million), beating the analysts’ average prediction of 2.85 billion yuan.
VeriSign Inc. climbed 12 percent for the biggest advance in the S&P 500 and its steepest climb since 2009. The company reported earnings that beat analysts’ estimates.
(A previous version of this story was corrected to make reference to the unemployment rate in the seventh paragraph).
To contact the reporter on this story: Oliver Renick in New York at firstname.lastname@example.org
To contact the editors responsible for this story: Lynn Thomasson at email@example.com Jeremy Herron, Michael P. Regan