While you were sleeping Tech slump continues

Tuesday 29th April 2014

Wall Street slid as investors resumed selling tech shares amid concern about valuations with some of the biggest momentum stocks losing ground.

In afternoon trading in New York, the Standard & Poor's 500 Index fell 0.21 percent, while the Nasdaq Composite Index shed 0.7 percent. Investors were back again at dumping tech stocks including Amazon, down 3.3 percent, Netflix, down 5.1 percent, Facebook, down 3 percent, LinkedIn, down 8 percent, and Twitter, down 3.9 percent.

"I think it's just momentum feeding on itself. Downward price action is feeding on itself, and it's bringing out more sellers," Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, told Reuters.

Even so, the Dow Jones Industrial Average rose 0.2 percent, propelled by gains in shares of Pfizer, last up 3.8 percent.

Pfizer said on Monday it is in talks again with AstraZeneca about a takeover after the British target company ended discussions following a bid of nearly US$100 billion made in January.

"We tried to get a mutual announcement to say we were in preliminary discussions," Pfizer chief executive officer Ian Read said on a conference call on Monday, Bloomberg News reported. "AstraZeneca rebuffed that, which is why we were forced to make the announcement."

AstraZeneca shares soared 14.4 percent in London.

"I feel pretty confident of a higher bid coming," Neil Veitch, global and UK investment director at SVM Asset Management, which owns AstraZeneca shares, told Reuters. "I think it's more likely than not that we'll see an agreed deal somewhere in that 52 to 53 pound range." That compares with almost 47 pounds per share in the previous bid.

Shares of Bank of America dropped more than 6 percent after the bank was forced to suspend, at least temporarily, its capital plan after saying it had miscalculated a figure in the stress-test submission to the Federal Reserve. It plans to file a revised plan soon.

There was positive news from the US housing market. A report by the National Association of Realtors showed the pending home sales index climbed 3.4 percent in March, following a 0.5 percent slide in February that was smaller than initially reported. It was the first gain in nine months.

"After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers," Lawrence Yun, NAR chief economist, said in a statement. "Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy."

In Europe, the Stoxx 600 Index ended the session with a 0.2 percent increase from the previous close. The UK's FTSE 100 added 0.2 percent, France's CAC 40 rose 0.4 percent while Germany's DAX gained 0.5 percent.

The US and European Union imposed fresh sanctions on Russian companies and individuals as a result of the standoff with Russia over Moscow's dealings in the Ukraine. The US has increased its focus on President Vladimir Putin's inner circle.

BusinessDesk.co.nz

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