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US: Stocks drop after days of big gains

Thursday, October 23, 2014 - 06:41
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[NEW YORK] US stocks dropped on Wednesday following mixed earnings, with the broad market retreating from three straight sessions of big gains.

The Dow Jones Industrial Average fell 153.49 points (0.92 per cent) to 16,461.32.

The broad-based S&P 500 fell 14.17 (0.73 per cent) to 1,927.11, while the tech-rich Nasdaq Composite Index lost 36.63 (0.83 per cent) at 4,382.85.

Equities spent most of the morning in positive territory, before shifting into the red at midday. Analysts said the pullback was not surprising given that the S&P 500 had surged 4.2 per cent in the prior three days.

"After a pretty big S&P rally, at some point there was going to be some pause," said Michael James, managing director of equity trading at Wedbush Securities.

Dow member Boeing fell 4.5 per cent on concerns about high production costs of its signature 787 Dreamliner aircraft even as it reported third-quarter earnings that bested expectations and raised its 2014 earnings forecast.

Yahoo rose 4.5 percent as third-quarter net profit surged to US$6.8 billion behind its divestment of shares in Chinese Internet commerce company Alibaba, which netted US$6.3 billion.

Cloud computing company VMware slumped 7.1 per cent on concerns about its outlook due to lower bookings growth.

Biotech company Biogen fell 5.4 per cent as sales of its Tecfidera treatment for multiple sclerosis disappointed. Analysts said safety concerns about the medication could further hit sales.

In non-earnings news, Dow component Johnson & Johnson rose 0.9 per cent after announcing it would spend US$200 million to accelerate an Ebola vaccine programme under development. The pharmaceutical giant plans tests on volunteers in January.

Bond prices fell. The yield on the 10-year US Treasury bond rose to 2.23 per cent from 2.21 per cent Tuesday, while the 30-year advanced to 3.00 percent from 2.98 per cent. Bond prices and yields move inversely.

AFP