European uncertainty continued to weigh on sentiment on Wall Street as NetApp became the latest technology company to warn that weak sales on the continent would affect future earnings.
Shares in the data storage company fell 12 per cent to $28.81, having touched their lowest level in two years earlier in the session, as the company issued weak forward guidance.
The shares suffered particularly as analysts suggested that the company was losing market share, as well as suffering from weaker demand.
Kulbinder Garcha, an analyst at Credit Suisse, said: “Management highlighted that the expected revenue decline ... is due to macro factors as well as high exposure to western Europe (at around 30 per cent of sales) and the public sector (at around 15 per cent of sales). While these have had some impact, we believe that the lower growth expected could also be a function of mid-end share loss.”
Tech stocks, which have been the standout performers so far this year, fell 0.9 per cent, far more than any other sector in the S&P 500, with NetApp’s guidance weighing on other companies in the computer and memory supply chain.
The hard disc drive manufacturer Western Digital fell 0.8 per cent to $33.83 and SanDisk, which makes memory devices, also fell 2 per cent to $32.25.
F5 Networks, the computer networking company, also fell 7.9 per cent to $108.56.
Dell shares also slipped 0.3 per cent to $12.45. The computer manufacturer had hit an 18-month low on Wednesday – in the wake of missing forecasts for its first quarter with European weakness principally to blame.
Hewlett-Packard bucked the sector’s trend with its shares surging more than 6 per cent at the open for the strongest start to the day in the S&P 500.
The computer maker beat analysts’ expectations for first-quarter earnings while investors appeared impressed by details provided by Meg Whitman, the company’s new chief executive, of plans to cut 27,000 jobs.
“The restructuring is welcome and long overdue,” Credit Suisse technology analysts said in a note. “Execution was strong across the board,” the note continued, referring to the company’s first-quarter performance, noting that margins improved in services and printing for the first time in six quarters.
However, the shares had slipped back to $21.77 by the close, for a more modest gain of 3.3 per cent.
Overall, US indices were mixed. The S&P 500 spent most of the day in negative territory, but staged a late recovery to close up 0.1 per cent up at 1,320.68 points. That puts the benchmark index some distance clear of the 1,300 level that it has breached three times during intraday trading in recent weeks.
The tech-heavy Nasdaq Composite index dropped 0.4 per cent to 2,839.38, but the blue-chip heavy Dow Jones Industrial Average climbed 0.3 per cent to 12,529.75.
Investors appeared to be unperturbed by the failure of a European summit on the eurozone debt crisis with expectations already set low for the conference.
Of more concern was a fall in Chinese factory orders and the deteriorating economic growth picture in the eurozone.
Such macroeconomic fears weighed heavily on select material and energy stocks.
Alpha Natural Resources, which exports metallurgical coal to China for use in the manufacture of steel, fell 5.1 per cent to $11.17 and Joy Global, which makes mining machinery, fell 6.7 per cent to $59.74.
Facebook shares climbed 3.2 per cent to $33.03, their second consecutive day of gains. That brought some relief for investors after the alarming share price that followed the social network’s initial public offering last week.
Recriminations over what was the biggest-ever tech IPO – which have hit investment bank underwriters and the Nasdaq exchange – appeared to still be weighing on some financial companies.
Morgan Stanley, the lead underwriter on the Facebook offering, fell 0.5 per cent to $13.31 and Goldman Sachs, another book runner, fell 1.2 per cent to $96.86. Financials in the S&P 500 were off 0.5 per cent, although they remain in positive territory for the week.
Southwest Airlines was the best performer in the S&P 500, climbing 4.6 per cent to $8.74, as it said it would spend $100m expanding Houston airport so that it can fly to international destinations from the hub.