By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks ended lower Thursday,
snapping a two-day rally, after disappointing results from Best Buy
Co. Inc., Citigroup Inc. and Goldman Sachs Group Inc. The Nasdaq
Composite edged higher.
The S&P 500 (SPX) lost 2.5 points, or 0.1% to end at
1,845.89, retreating from its record closing level reached on
Wednesday. The Dow Jones Industrial Average(DJI) shed 64.93 points,
or 0.4%, to 16,417.01. The blue-chip index was down in five out of
past seven sessions.
The Nasdaq Composite(RIXF) edged up 3.8 points, or 0.1% to
4,218.69.
After a two-day rally, a cautious mood prevailed as investors
piled into defensive stocks and sold off cyclicals. Read the recap
of the stock market live blog.
Uri Landesman, president of Platinum Partners, said a market
correction is long overdue, and when it starts, the slide could be
exacerbated given the big paper profits that investors have.
"The economy is surprisingly strong and earnings are fairly good
and the markets are priced to perfection. But at this point,
markets are extended, as they have been going up almost in a
straight line since March of 2009. There is no support level: If
the markets start sliding there won't be much resistance and the
fall maybe quite drastic," Landesman said.
Investors digested disappointing results from electronics
retailer Best Buy and Citigroup as well as economic data that
generally met expectations.
Best Buy (BBY) plunged 29% after the retailer reported
unexpectedly disappointing holiday sales. The CEO called it a
"speed bump."
Citigroup Inc. (C) shares were down 4.4% after the bank's
fourth-quarter earnings missed Wall Street estimates. Read David
Weidner's take on the results.Financials fared the worst among the
S&P 500's 10 sectors.
Goldman Sachs Group Inc. (GS) shares fell 2% after the bank
announced a sharp drop in profits due to falling trading revenues.
Goldman's loss weighed the most on the price-weighted Dow.
In economic news, the number of Americans who applied last week
for unemployment benefits fell slightly and is now back to a level
that prevailed shortly before the Thanksgiving holiday, broadly in
line with economists' forecasts. Separately, U.S. consumer prices
rose a seasonally adjusted 0.3% in December, led by higher energy
and shelter costs, the Labor Department said. The overall and core
inflation numbers were also in line with expectations.
During an interview with Liaquat Ahamed, Fed Chairman Ben
Bernanke defended the response to the financial crisis and said
stock market valuations are within historic range. Commenting about
the central bank's bond purchases, known as quantitative easing, he
said: "The problem with QE is that it works in practice but it
doesn't work in theory."
Earlier, in a paper delivered at a Brookings Institution seminar
on U.S. monetary policy, San Francisco Fed President John Williams
warned of "nagging concerns that large-scale asset purchases carry
with them particular risks to the economy or the health of the
financial system that we still don't fully understand."
He also said the central bank's new forward-guidance tool seems
"overly simplified and prone to misinterpretation."
Shares of asset manager BlackRock Inc. (BLK) rose 1.6% after the
firm said profit jumped 22% in the fourth quarter, as the amount of
money it manages climbed 14%. The firm also raised its quarterly
cash dividend to $1.93 per share.
Yahoo Inc. (YHOO) said after Wednesday's closing bell that Chief
Operating Officer Henrique de Castro is leaving the company,
effective Thursday. Shares dropped 1.8%. Read commentary: Yahoo COO
exit may be a bad sign for fourth quarter.
Shares of Nu Skin(NUS) plunged 26% on news that Chinese
authorities have launched a probe into allegations that the
distributor of personal care products is operating an illegal
pyramid scheme.
SolarCity Corp. (SCTY) climbed 12% after Deutsche Bank analysts
initiated coverage of the solar company with a buy rating and a $90
price target, according to news reports.
Zoom Technologies Inc. (ZOOMD) revved up 18% after the tiny
Chinese mobile and telecommunications investor rubber-stamped a
deal late Wednesday to buy an online business travel provider.
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