THE THREE main US indexes retreated slightly on Wednesday from two-month highs, as videogame makers reported disappointing revenue forecasts, while investors waited for more clarity on US-China trade developments.
Electronic Arts Inc and Take-Two Interactive Software Inc tumbled more than 13 per cent, leading the communication services sector down 1.43 per cent, the most among the nine major sectors in the red.
The technology sector, up 0.20 per cent, was boosted by chipmakers with the Philadelphia chip index rising 2.87 per cent.
Apple supplier Skyworks Solutions Inc jumped 11.64 per cent after announcing a $2 billion buyback, while Microchip Technology rose 8.06 per cent after the company suggested a recent chip industry downturn was nearing a bottom.
The possibility of the S&P 500 extending its winning streak for the sixth straight day was under pressure.
“It’s been a mixed bag of earnings reports and concerns still loom, it’s uncertainty that causes these pauses in the markets,” said Brian Yacktman, chief investment officer at YCG Enhanced Fund in Austin, Texas.
“The uncertainty of the ongoing trade negotiations with China has been looming over the markets and once there is certainty on the outcome, there is no question that markets will breathe a sigh of relief.”
US 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 US tariffs on Chinese goods.
A strong run in stocks recently, boosted by US-China trade optimism and a dovish stance from the Federal Reserve has put the benchmark index about 7 per cent away from its record closing high in September, after it fell about 20 per cent from that level last year.
Earnings have also been contributing to market optimism. About 70 per cent of more than half of the S&P 500 companies that have reported topped profit expectations, according to IBES data from Refinitiv.
At 12:56 p.m. ET the Dow Jones Industrial Average was down 12.02 points, or 0.05 per cent, at 25,399.50, the S&P 500 was down 6.13 points, or 0.22 per cent, at 2,731.57 and the Nasdaq Composite was down 27.05 points, or 0.37 per cent, at 7,375.04.
Anadarko Petroleum Corp slid 5.83 per cent after the oil and gas producer reported a fourth-quarter profit that missed analysts’ estimates.
On the upside, Capri Holdings Ltd, formerly Michael Kors, jumped 10.61 per cent after the company posted a better-than-expected quarterly profit and raised its revenue forecast.
On Tuesday, President Donald Trump offered no specific economic policy initiatives in his State of the Union address and reiterated his vow to build a wall along the US-Mexico border.
Also expected on Wednesday is Fed Chairman Jerome Powell’s address at 7:00 pm ET in Virginia.
Declining issues outnumbered advancers for a 1.55-to-1 ratio on the NYSE and a 1.12-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and two new lows, while the Nasdaq recorded 33 new highs and 11 new lows. – Reuters
