Markets pare some losses but techs still drag
Buying returned to U.S. stocks on Thursday after a key semiconductor index bounced off its lows, helping to reduce losses and leaving the market little changed.
Tech companies Nvidia Corp and Symantec Corp cut expectations for the next quarter, raising questions about demand for technology components and contributing to concerns that the economy was growing at a slower pace.
Nvidia Corp was down 9.2 percent to $9.20, and Symantec Corp was down 10.3 percent to $13.17.
But the PHLX Semiconductor Index bounced off a session low near its 200-day moving average, a key technical level watched by investors to determine market movement.
The index still was down 1.9 percent but up 6 percent for July.
Any time you have a pullback like today, it's going to look like a very good entry point, said Craig Ellis, managing director of Caris & Company in San Francisco. Investors have shown a lot of interest in adding to well-positioned, big-named stocks, but were looking for a good entry point.
The Dow Jones industrial average <.DJI> dropped 0.53 points, or 0.01 percent, to 10,497.35. The Standard & Poor's 500 Index <.SPX> dropped 1.28 points, or 0.12 percent, to 1,104.85. The Nasdaq Composite Index <.IXIC> dropped 1.04 points, or 0.05 percent, to 2,263.52
The PHLX semiconductor index <.SOXX> fell as much as 2.8 percent on Thursday, its largest percentage decline in nearly two weeks, taking the index near its 200-day moving average. The 200-day average, now near 348, served as resistance on July 20.
We've had a SOXX that's been trapped in the trading range between 330 and 370, and just a few days ago we were toward the higher end of that range, Ellis said. We finally got some bad news so we've sold off back toward the middle of that range.
The index hit a five-week closing high just below 370 on Monday.
Exxon Mobil Corp , the S&P's largest company by market capitalization, fell 0.9 percent to $60.39 after reporting a better-than-expected quarterly profit.
Consumer staples also fell, with the S&P consumer staple index down 1.5 percent after Kellogg Co lowered its outlook. The food company's shares fell 6.1 percent to $48.39.
So far, 60 percent of companies in the S&P 500 have reported quarterly earnings, with 75 percent of companies beating expectations and 35.1 percent year-over-year earnings growth.
But some companies' forecasts for the third and fourth quarters have missed Wall Street's expectations.
Earnings are looking good, but confidence in the future is missing, said Gail Dudack, chief investment strategist at Dudack Research Group in New York.
The S&P 500 remained below its 200-day moving average and
slightly below its 50 percent Fibonacci retracement. The two are seen by many investors as key measures of market direction.
(Reporting by Matthew Lynley; Additional reporting Rodrigo Campos)
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