Stocks pull back a bit after prior day’s big jump
NEW YORK — Investors are taking a breather after a surge in stocks that sent the Dow Jones industrials above the 9,000 mark for the first time since January.
Stocks are slightly lower in early trading Friday, as disappointing earnings news from companies like Microsoft Corp. and Amazon.com Inc. weigh on the market.
Microsoft shares dropped more than 7 percent after the tech giant said late Thursday its revenue fell short of analysts’ expectations. Amazon.com also reported weaker-than-expected sales, and its shares fell more than 6 percent in early trading.
The reports underscore the prevailing theme of earnings season thus far: Companies have been able to report better-than-expected earnings in large part because of aggressive cost-cutting measures, not stronger sales. Revenue at some companies is still sagging as consumers forgo spending to shore up their savings amid the ongoing recession.
Still, investors have taken the improved results as confirmation that the economy is indeed healing and that a turnaround is possible by the end of this year.
On Thursday, news that existing home sales rose in June for the third straight month and by more than economists had expected added to the market’s optimism.
In just nine days, both the Dow and the Standard & Poor’s 500 index have climbed 11 percent, reigniting a rally that carried the market up as much as 40 percent this spring. That rally fizzled last month as still growing unemployment and weak consumer confidence fed doubts about the economy’s recovery.
Despite the market’s impressive performance over the past two weeks, analysts warn that investors still has a number of obstacles to contend with, including earnings reports from retailers that will provide more insight into the financial health of the consumer.
In the first half hour of trading Friday, the Dow Jones industrial average slipped 8.01, or 0.1 percent, to 9,016.28, while the Standard & Poor’s 500 index lost 1.95, or 0.2 percent, to 974.34. The Nasdaq composite index fell 17.57, or 0.9 percent, to 1,956.03.
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