Wall Street Takes Sharp Losses, Pulled Down by Tech Stocks

Michael Teague  |

Stocks dropped sharply across the board for the second time this week on Wednesday, giving credence to fears that investors are finally pulling back after the string of record-breaking gains in the first quarter of 2013.

Monday’s sell-off of commodities and equities was exacerbated by the terrorist attack that took place at the Boston Marathon about an hour before the end of trading. While authorities now believe they have identified a photograph of a suspect, Mississippi Senator Roger Wicker yesterday received a letter that tested positive for the deadly poison ricin, followed today by a similar letter that was addressed to president Obama.

The strange and unexpected nature of these events have left news organizations scrambling for answers, and citizens, investors among them, feeling more frightened than at any time since the attacks of September 11th.

The S&P 500 was down 1.43 percent to 1,552.01, with the most significant pressure coming from Apple (AAPL), down 6.09 percent to $400.30. News that the tech company’s audio chip supplier Cirrus Logic (CRUS) would be reporting revenue substantially short of estimates, as well as lowering its revenue targets for the current quarter was taken as an indication of a slip in demand for Apple’s once-dominant mobile products.

Tech stocks in general were a drag on the S&P, especially semiconductor companies: Teradyne Inc. (TER) was down 5.53 percent to $14.51, Micron Technology Inc. (MU) was down 4.26 percent to $9.45, Linear Technology Corp. (LLTC) dropped 4.20 percent to $35.14, and Broadcom Corp. (BRCM) lost 4.03 percent to $32.60.

The Dow lost 0.94 percent to 14,618.59, with financial stocks among the day’s biggest losers. Bank of America (BAC) dropped 4.68 percent to $11.70 after it reported revenue losses for Q1 in its banking, mortgages and debt, and currency and commodities trading sections. The bank reported an 8.4 percent loss in adjusted revenue, news that was compounded by the announcement that it had settled three lawsuits left over from its Countrywide unit relating to mortgage-backed securities for a total of $500 million.

JPMorgan Chase (JPM) was not far behind with a loss of 3.52 percent to $46.69. While JPMorgan beat expectations in terms of earnings, the bank had come up short of revenue estimates, a fact of which was perhaps dredged back to the surface after the release of Bank of America’s earnings report.

The Nasdaq was off 1.84 percent to 3,204.67 for the day’s biggest loss, weighted primarily by tech stocks such as Apple, Cirrus Logic, down 15.69 percent to $18.05, Cisco Systems (CSCO) down 2.50 percent to $20.63, and online gaming company Zynga (ZNGA), down 2.42 percent to $3.22.

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