US stocks lower as tech, banks drag down market
NEW YORK (AP) — Stocks turned negative Monday afternoon, dragged down by falling technology and bank companies that snuffed out investors’ excitement about a potential blockbuster pharmaceutical deal.
KEEPING SCORE: The Standard & Poor’s 500 index was down 11 points, or 0.6 percent, to 1,852 as of 1:25 p.m. (1725 GMT). The Dow Jones industrial average lost 23 points, or 0.1 percent, to 16,339 and the technology-heavy Nasdaq composite sank 60 points, or 1.5 percent, to 4,016.
BANK WORRIES: Bank of America sank $1.01, or 6.3 percent, to $14.94 after it unexpectedly announced it would suspend its stock buyback program and dividend increase. The bank discovered an error in how it calculates its capital ratio, a crucial measure of its strength. The Federal Reserve asked the bank to put its buyback and dividend increase on hold until the error was fixed.
Other banks moved lower. Goldman Sachs fell 3 percent, while Wells Fargo, JPMorgan Chase and Citigroup were down roughly 1 percent.
PFIZER COURTS ASTRAZENECA: Pfizer renewed its push to buy British drug company AstraZeneca for $100 billion. The deal would be the latest big merger in the drug industry in recent weeks, if it happens. AstraZeneca jumped $10.96, or 16 percent, to $79.60. Pfizer rose 90 cents, or 3 percent, to $31.63.
MORE PAIN FOR TECH: The Nasdaq took the brunt of the afternoon selling, as investors once again ditched risky tech and biotech stocks. Amazon was down $15.50, or 5 percent, to $288.39 after falling 10 percent on Friday. Netflix was down $21.90, or 7 percent, to $300 and Facebook dropped $2.76, or 5 percent, to $54.92.
After snapping up tech stocks last year, investors have spent most of 2014 punishing them. The Nasdaq is down 4.1 percent in April, compared with a 1 percent fall in the S&P 500 and 0.8 percent decline in the Dow. The Nasdaq is on pace for its worst month since October 2012.
“The froth is finally burning off in some of these sectors like technology,” said Quincy Krosby, a market strategist at Prudential Financial. “Investors want to rely more on fundamentals, and it’s hard to justify some of these valuations.”
FED WATCH: The Fed will start a two-day policy meeting on Tuesday. The central bank is expected dial back further its stimulus for the U.S. economy by reducing monthly bond purchases to $45 billion. Those purchases, which totaled $85 billion in December, have helped hold down long-term interest rates for consumers and businesses.
UKRAINE: Investors are watching the tensions between Ukraine and Russia. The White House announced additional sanctions against seven Russian officials and several companies in response to Russia’s annexation of Crimea. In a separate development, the mayor of Ukraine’s second-largest city was wounded by an unidentified gunmen.