US: Internet stocks sink after EU court ruling on data

[NEW YORK] Major US Internet company shares fell on Tuesday after the top EU court ruled in a case involving Facebook that an agreement on cross-Atlantic data transfers was invalid for privacy reasons.

But blue-chip stocks closed slightly higher, pulled up by a 7.7 per cent surge in DuPont over the sudden departure of its longtime chief executive Ellen Kullman.

The Dow Jones Industrial Average gained 13.76 points (0.08 per cent) at 16,790.19.

The broad-based S&P 500 fell 7.13 (0.36 per cent) to 1,979.92, while the tech-rich Nasdaq Composite Index lost 32.90 (0.69 per cent) at 4,748.36.

The Nasdaq sank on the back of Internet and health shares.

Facebook lost 1.3 per cent, Twitter 1.9 per cent and Amazon 1.1 per cent after the European Court of Justice invalidated the 15-year-old Safe Harbour agreement which allowed US Internet companies to move data on customers and consumers across the Atlantic for holding and use in US-based databanks.

The ruling could raise costs and operating difficulties for the data-dependent companies.

Google though did not appear harmed by the ruling, adding 0.6 per cent.

Health insurers also lost sharply amid worries the sector has pushed too far, valuation-wise.

UnitedHealth Group lost 3.0 per cent, Anthem 2.4 per cent, Aetna 3.7 per cent, and Cigna 2.1 per cent.

Michael James of Wedbush Securities said some of the fall on Tuesday spilled over from the 10.6 per cent plunge in Illumina, a biotech firm which said it would fall short of fourth-quarter revenue forecasts.

"The negative sentiment from that is carrying over to just about everything healthcare-related," he said.

The abrupt retirement of DuPont's chief executive, with no replacement named, came as the company slashed its profit outlook for the year.

Nevertheless investors bid up the shares sharply.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.04 per cent from 2.06 per cent Monday, while the 30-year slipped 2.87 per cent from 2.90 percent. Bond prices and yields move inversely.

AFP