Apple’s sales slowdown tugs Nasdaq index lower
NEW YORK (AP) — A sharp drop in Apple’s stock is pulling the Nasdaq down with it after the tech giant predicted weaker sales. Other market indexes were mixed.
Apple sank $61.08 to $452.93. With iPhone sales hitting a plateau and no new products to introduce, Apple said sales would likely increase just 7 percent in the current quarter. That’s a let-down for a company that has regularly posted growth rates above 50 percent.
The Dow Jones industrial average was up 33 points at 13,812 as of 2:19 p.m. EST.
The Standard & Poor’s 500 index dropped two points to 1,493. Earlier in the day, the S&P 500 crossed above 1,500 for the first time since December 2007.
The broad gauge of the stock market has already gained 4.6 percent this year and climbed six days in a row.
One reason for the market’s recent rise is that some of the biggest obstacles have been pushed aside, said Brian Gendreau, a market strategist at Cetera Financial Group. On Wednesday, the House of Representatives agreed to suspend the federal government’s borrowing limit until May 19, allowing the U.S. to keep paying its bills for another four months.
“Politics is off the table for now and Europe seems like it’s stable. So what’s left? It’s earnings. And aside from Apple it seems like pretty good news,” Gendreau said.
The Nasdaq fell 27 points to 3,127. A 12 percent drop in Apple, the country’s most valuable company, was enough to pull the technology-heavy index lower. Apple makes up 10 percent of the index.
Netflix jumped $38.49 to $141.78, a 37 percent bounce. Analysts had expected rising costs to lead the movie and TV show distributor to post a loss in the last three months of 2012. But Netflix said late Wednesday that it turned a profit with the help of 2 million new subscribers.
The Labor Department reported that the number of Americans applying for unemployment aid fell last week to the lowest since January 2008. Applications dropped 5,000 to 330,000. The four-week average also hit a five-year low.
The employment report nudged prices for U.S. government bonds down, sending their yields higher. The yield on the benchmark 10-year Treasury note inched up to 1.85 percent from 1.83 percent late Wednesday.
Airline stocks were mostly higher. Despite rising fuel costs, Southwest reported better earnings than analysts had expected, thanks partially to the airline charging $8 more for the average fare. The parent company of United Airlines and Continental took a heavy quarterly loss but announced plans to cut around 600 jobs.
Southwest Airlines rose 5 cents to $11.41. United Continental Holdings gained 43 cents to $25.43.
Microsoft and Starbucks are scheduled to report after the closing bell.
Among other companies reporting earnings:
— Xerox gained 25 cents to $7.83. Xerox’s net income shrunk over the same period the previous year but it still beat analysts’ estimates by a penny, helped by better revenue from its business services.
— Union Pacific dropped $1.76 to $133.55. The country’s largest railroad company posted weaker revenue than analysts had predicted, a result of falling coal and crop shipments.