On Wednesday, markets sunk lower to close in the red after disappointing results from Goldman Sachs’ (NYSE:GS) and Cree Inc (NASDAQ:CREE). Results from these companies pressured financial and tech stocks to fall and the market slid from the record highs it touched on Tuesday.
The Dow Jones Industrial Average lost 0.11% and closed at 11,825.29. The S&P 500 was down 1.01% and closed at 1,281.92. The tech driven Nasdaq fell 1.46% and ended the day at 2,725.36. Wednesday recorded the highest one-day fall of the Nasdaq and S&P 500 since November 2010. On the New York Stock Exchange, declining stocks at 2,319 were clearly the gainers, with the advancing ones at 673. About 8.35 billion shares were traded on NYSE, keeping the volumes below average.
On the economic front, a dramatic increase in the figures of building permits has tempered the effect of a slide in the figures of Housing Starts on the markets. According to a report issued by the U.S Census Bureau, the figures for new home construction fell 4.3% whereas the figures of building permits has rocketed up 16.7%.
Coming to international news, Chinese President Hu Jintao’s visit to the US was closely watched by investors and media alike. According to chief market economist of Avalon Partners, Peter Cardillo, the U.S would be looking for ways to re-evaluate the yuan and would be possibly discussing ways to explore new and better opportunities in the country of the Red Dragon.
On a sectoral basis, banks and tech stocks were the primary losers in Wednesday’s trade as Goldman Sachs’ (NYSE:GS) posted lower than expected results. Key shares in the financial sector to suffer losses include Bank of America (NYSE:BAC) which fell 0.63%, and American Express (NYSE:AXP) and JP Morgan (NYSE:JPM) which declined more than 2%. Shares of LED lighting maker Cree Inc (NASDAQ:CREE) decreased more than 14% to end the day at $53.63 after it reported weak earnings figures. Shares of Rubicon Technology (NASDAQ:RBCN) and Linear Technology (NASDAQ:LLTC) were both hit badly and ended the day’s trade at 20.75 and 34.56 respectively. The fall in the bank stocks was primarily due to weak earnings results and new stiff financial regulations, along with weaknesses in the housing sector and a slow rate of loan growth.
On to news about earnings and estimates, financial major Goldman Sachs’ (NYSE:GS) revenues declined even though the company’s earnings per share increased. Goldman Sachs’ (NYSE:GS) posted a 53% drop in the last quarter earnings figures. Although share prices of Wells Fargo & Co (NYSE:WFC) fell 2.1%, the company reported its earnings figures before market hours which saw a rise of 21% revenue in the fourth and last quarter with EPS figures matching expectations. MGIC Investment Corp (NYSE:MTG) also missed its estimate figures as share prices dropped 20.52% to $9.26. Bank of America (NYSE:BAC) which is expected to release their earnings figures on Friday slumped 4.2%. Weaknesses can also be seen in prices of other bond insurers. Share prices of PMI Group Inc (NYSE:PMI), MBIA Inc (NYSE:MBI) and Radian Group (NYSE:RDN) fell 17.54%, 6.86% and 15.04% respectively. LED lightening Maker Cree Inc (NASDAQ:CREE) also posted earnings that too came short of expectations. Company shares fell 15% after the company missed expectations regarding the current quarter.