Wall Street rally pauses after underwhelming revenue forecasts
U.S. stocks edged lower on Wednesday as videogame makers reported disappointing revenue forecasts and investors awaited developments on U.S.-China trade relations.
The benchmark S&P 500 and the Nasdaq were weighed by declines in shares of Electronic Arts Inc, which tumbled 12.3 percent after the videogame publisher forecasted full-year revenue below Wall Street estimates. The sharp drop pulled down shares of rival videogame publisher Activision Blizzard Inc, which fell 10.9 percent.
Shares of industry peer Take-Two Interactive Software Inc also dropped sharply, 14.5 percent, after the company`s similarly underwhelming forecast.
The slump in videogame stocks contributed to a 1.7 percent decline in the S&P 500 communication services sector, the largest drop among the S&P`s major sectors.
Despite the fall, Wall Street`s indexes remained near two-month highs. A 7.5 percent gain in the S&P 500 would put the index above its record closing September high.
"The market is feeling a little exhausted after we`ve had a nice run in January and early February," said Nathan Thooft, global head of asset allocation at Manulife Asset Management in Boston.
"It`s hard to decipher macro dynamics. The Fed is dovish, but the market has fully priced that in. Then you have the trade war conversations. We get little bits of news every day."
The Dow Jones Industrial Average fell 28.83 points, or 0.11 percent, to 25,382.69, the S&P 500 lost 8.68 points, or 0.32 percent, to 2,729.02 and the Nasdaq Composite dropped 34.06 points, or 0.46 percent, to 7,368.02.
U.S. Treasury Secretary Steven Mnuchin said trade talks with China last week were "very productive" and confirmed that he and other officials will travel to Beijing for the next round of meetings, as the world`s biggest economies aim to clinch a deal to avert a March 2 increase in U.S. tariffs on Chinese goods.
Federal Reserve Chairman Jerome Powell will speak later on Wednesday at 7:00 p.m. ET (0000 GMT) in Virginia.
Though the major indexes drooped, the Philadelphia SE Semiconductor Index climbed 2.5 percent. Shares of Apple supplier Skyworks Solutions Inc jumped 11.4 percent after the company announced $2 billion in stock buybacks, while shares of Microchip Technology rose 7.6 percent after the company suggested the chipmaker industry was close to recovery from its recent downturn.
Shares of Capri Holdings Ltd, formerly Michael Kors, jumped 11.7 percent after the fashion company posted a better-than-expected quarterly profit and raised its revenue forecast.
Anadarko Petroleum Corp shares slid 6.7 percent after the oil and gas producer`s fourth-quarter profit missed analyst estimates.
Declining issues outnumbered advancing ones on the NYSE by a 1.70-to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favoured decliners.
The S&P 500 posted 16 new 52-week highs and two new lows; the Nasdaq Composite recorded 35 new highs and 13 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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