By Anora Mahmudova and Sara Sjolin, MarketWatch
Biotechnology stocks drop more than 8% since peak last week
U.S. stocks limped out of April, managing to eke out marginal
gains in the month after a sharp selloff Thursday.
Losses in the technology and biotechnology sectors, led the main
indexes lower, which came under severe selling pressure amid
higher-than-usual volumes.
The thumping stocks endured came as a number of economic
releases and quarterly reports already had been shaking the
market's confidence, a day after the Federal Reserve left open the
possibility of an interest rate hike as early as June.
Read: Biotechs undercut key support level
(http://www.marketwatch.com/story/biotechs-undercut-key-support-level-2015-04-30)
Brian Fenske, head of sales trading at ITG, said Thursday's
trading action just reminds investors that the market can be
tumultuous.
"It is probably a combination of events and some earnings over
the past few days that has sparked a selloff. Big moves in currency
and commodity markets have played a role as did disappointing
earnings from Yelp and Twitter," Fenske offered.
The S&P 500 (SPX) lost 21.34 points, or 1%, to 2,085.51, but
recorded a 0.9% gain over the month. Tech and health-care stocks
were hit the hardest.
The Dow Jones Industrial Average (DJI) dropped 195.01 points, or
1.1%, to 17,840.52, leaving it with a gain of 0.4% over the month
and flat year-to-date. During session lows, the blue-chip index
briefly turned negative for the year.
Taking the worst of the beaten Thursday was the Nasdaq Composite
(RIXF), which sank 82.22 points, shaving 1.6%, to 4,941.42. The
tech-heavy index gained 0.8% in April.
The iShares Nasdaq Biotechnology index ETF (IBB) dropped 3.2%
and was down more than 8% from its peak reached last Thursday,
driving the Nasdaq lower.
Fenske took some comfort in the view that selling hasn't been
frenetic. "This selling is not frenzied, it's just a regular down
day, which is normal in equity markets," he added.
Thursday's economic data came in above expectations and pointed
to improvement in the labor market and further inflation
stabilization - both are key gauges of U.S.economic health that the
central bank said it would use to help guide its hand as it aims to
start normalizing interest rates.
Channing Smith, managing director at Capital Advisors, said
recent fluctuations in currency and bond markets have created
confusion for equity investors.
"Treasury yields have risen over the past week or so and the
euro strengthened rapidly, something that is not quite explainable.
Those unusual moves spooked investors, by creating uncertainty,"
Smith said.
He also pointed to very high valuations despite falling
earnings, but said eventually stock prices have to reconcile with
the global and domestic economic situation, which is experiencing a
slowdown.
(http://www.marketwatch.com/storyno-meta-for-guid)Data:The
number of people who applied for U.S. unemployment benefits
(http://www.marketwatch.com/story/us-jobless-claims-sink-to-15-year-low-2015-04-30)fell
34,000 to 262,000 in the seven days from April 19 to April 25, the
lowest level in 15 years.
The cost of employing the average U.S. worker
(http://www.marketwatch.com/story/wages-pick-up-in-the-first-quarter-2015-04-30)climbed
0.7% in the first quarter.
Consumer spending rose a seasonally adjusted 0.4% in March
(http://www.marketwatch.com/story/consumer-spending-shows-limited-advance-in-march-2015-04-30).
But personal income was flat last month, likely reflecting slower
job creation. Inflation, as gauged by the PCE price index, climbed
0.2% in March.
The Chicago PMI jumped in April to a reading of 52.3 from 46.3
in March, to return above the 50-mark signaling expansion. A
double-digit gain in the new orders component led to the
advance.
Earnings: Shares of LinkedIn Corp.(LNKD) tumbled 20% in
after-hours trade Thursday after the company gave a second-quarter
and full-year earnings and revenue outlook way below Wall Street
expectations.
Shares of Yelp Inc.(YELP) dropped 24% after disappointing
quarterly results.
Apple Inc.(AAPL) shares fell 2.7%, extending hefty losses for a
second day. A component for Apple Watch supplied by a contractor
was found to be defective, disrupting the supply of the new
product. Reports also surfaced suggesting that its heart-rate
monitor may not work on darker skin.
For more news on Thursday stock movers and shakers please read
here (http://www.marketwatch.com/storyno-meta-for-guid).
Other markets: Asian stock markets closed mostly lower
(http://www.marketwatch.com/storyno-meta-for-guid), while European
benchmarks (http://www.marketwatch.com/storyno-meta-for-guid) were
mixed.
Crude-oil prices (CLM5) settled 1.8% higher at $59.63
(http://www.marketwatch.com/story/oil-prices-stay-supported-as-crude-trades-at-year-high-2015-04-30)
and gained 25% in April, its largest monthly gains in nearly six
years. Gold futures sank 2.3% to $1,182.40 and posted a modest loss
for the month. The dollar (DXY) traded mixed against other major
currencies (http://www.marketwatch.com/storyno-meta-for-guid).
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