Stocks fell Wednesday, a day after the Standard & Poor's 500's biggest advance in more than a month, as Intel and IBM drove a slump in technology shares following their disappointing results.
The S&P 500 dropped 5.64 points, or 0.4%, to 1385.14 after gaining 1.5% Tuesday. The Dow Jones industrial average fell 82.79 points, or 0.6%, to 13,032.75. The Nasdaq composite index fell 11.37 points, or 0.4%, to 3031.45.
Stocks fell as Intel forecast a gross margin that was lower than some analysts predicted, and IBM's sales missed forecasts. Intel shares fell 52 cents to $27.95. IBM stock lost $7.32 to $200.13.
"Profits are lukewarm," says Nick Sargen, chief investment officer at Fort Washington Investment Advisors. "You get disappointments from some bellwether technology companies at a time when the market has had such a good run. We're not bearish, but if we're going to add to positions, we need a pullback."
The S&P 500 had risen 11% in 2012 through Tuesday on better-than-estimated economic and corporate data. Stocks also dropped as Bank of England policymakers said inflation may be higher than forecast. Spain will auction 3.3% two-year notes and 5.85% 10-year debt today.
BlackRock's Laurence Fink, who has been advising investors to put more money in stocks, says clients are still overwhelmed by fear as global markets remain "fragile" despite the first-quarter rally. Fink says investors remain pessimistic, and customers removed money from active stock products while turning to passive investments such as exchange traded funds.
The company's share of fees from active stock funds, which last year were the biggest contributor to investment advisory revenue, fell below stock ETFs this year as investors migrated to passive products.
"The fears of the investor still are more overwhelming than the hope for a better future," says Fink, chairman and chief executive officer of BlackRock. "Despite the rally in global equities from its lows, I would still qualify the market to be quite fragile."
Highlights: Genworth Financial fell $1.83 to $5.87, a 24% drop that was the day's biggest in the S&P 500. The life insurer and mortgage guarantor postponed the initial public offering of its Australian unit backing home loans to early 2013 after "elevated" losses in the nation this year.
Intuitive Surgical gained $38.99 to $584.52 after the maker of a robotic surgery systems reported earnings above expectations.
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