Stocks to buy when oil drops
A selloff in technology stocks following disappointing results from Apple Inc. and Microsoft Corp. as well as continued slide in oil prices pushed the broader U.S. markets into losses on Wednesday.
The tech-heavy Nasdaq Composite COMP, -3.82% fell 36.35 points, or 0.7% to 5,165, as Apple, its heaviest-weighted stock, slid 4.2%.
The iPhone maker’s loss shaved off about 3.6 points from the S&P 500, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The benchmark index SPX, -3.94% closed 5 points, or 0.2%, lower at 2,114.15 with five of its 10 sectors finishing with losses. The technology sector dropped 1.6%, as investors dumped tech stocks following earnings misses from components Apple and Microsoft.
The Dow Jones Industrial Average DJIA, -3.57% dropped 68.25 points, or 0.4%, to 17,851.04. The tech giant’s stumbles contributed to 36 points of the Dow’s drop.
Apple’s AAPL, -2.50% sales outlook for the current quarter missed expectations late Tuesday, while Microsoft MSFT, -3.23% posted its biggest quarterly loss ever on a write-down tied to its Nokia purchase. Microsoft dropped 3.7%.
What strategists are saying: “The big drop in Apple is due to overly optimistic expectations. But the company’s quarterly numbers were staggering. I would not sell the stock on weakness, and if you don’t already own it, it’s a good buying opportunity,” said Jerry Braakman, chief investment officer of First American Trust.
Apple shares are up more than 13% since the start of the year, compared with a 2.7% gain for the S&P 500 index. The main index came close to topping it previous record close on Monday, but remains stuck in
the trading range it has been for months.
Kim Caughey Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group, said Apple isn’t the only reason why tech stocks sold off.
“The bigger question is how the economy is doing and results from Microsoft, Intel and IBM all point to sluggish IT spending by businesses,” Forrest said.
She noted that markets are beginning to get interesting for value investors like herself. “As sectors drift lower, we are more inclined to buy stocks that reach a price at which we don’t regret buying,” she said.
Individual stocks with news: Intuitive Surgical, Inc. ISRG, -3.16% shares surged 8.9% after reporting an increase in revenue, profit and number of procedures during the second quarter.
Chipotle Mexican Grill Inc. CMG, -2.19% shares jumped 7.8% despite disappointing quarterly earnings. Traffic levels are rising in July.
Boeing Co. BA, -3.43% shares rose 1% after quarterly results, but shares of Yahoo Inc. YHOO, -4.92% dropped 1.2% following adjusted quarterly profit that missed expectations late Tuesday.
Other markets: The rout continued for gold, with prices for the yellow metal falling for the 10th session in a row. August gold GCQ5, -0.55% fell 1.1% to settle at $1,091.50 an ounce.
The dollar lost ground against the pound as expectations increased for a rise in U.K. interest rates. Crude-oil futures US:CLU5 dropped 3.3% to settle at $49.19 a barrel following a surprise increase in U.S. inventories. It is the first time the most-active contract has settled below $50 a barrel since early April.
European stocks lost ground as disappointing earnings weighed, while Asian equities closed mostly lower .Source: www.marketwatch.com