U.S. stocks fell for the week, led by Internet and biotechnology companies, as investors sold the bull market’s biggest winners and tensions in Ukraine escalated.
Shares rallied in the final session as retailers gained on data showing household purchases increased in February. Facebook Inc. plunged 11 percent, the most since 2012, after saying it will spend $2 billion to buy Oculus VR Inc. to expand into wearable hardware. King Digital Entertainment Plc (KING), the maker of the “Candy Crush” smartphone game, lost 20 percent in its first three days of trading. Citigroup Inc. (C) slid 5.7 percent after failing stress tests from the Federal Reserve.
The Standard & Poor’s 500 Index fell 0.5 percent to 1,857.62 over the five days. The Dow Jones Industrial Average (INDU) increased 0.1 percent to 16,323.06. The Nasdaq Composite Index slumped 2.8 percent and the Russell 2000 Index slid 3.5 percent, capping the worst week since 2012 for both indexes.
“There’s a general rotation going on,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $150 billion, said in a phone interview. There is a “shift from the high fliers of 2013 to more value-based investments,” he said.
Some of the biggest losses occurred in technology companies that sold shares to the public in the last few years. Yelp Inc., Twitter Inc. and Pandora Media Inc. dropped more than 7 percent for the week. Since reaching a 13-year high on March 5, the Nasdaq 100 Index has fallen 4.2 percent. The gauge has rallied 242 percent in five years.
Biotechnology and small-cap shares were also hit by the move away from the best-performing stocks of 2013. A Nasdaq gauge tracking the industry slumped 7 percent for a fifth week of losses. The Russell 2000 (RTY) fell all but one day during the week. The measure for smaller companies is down 1 percent this year, poised to snap a six-quarter streak of gains, the longest stretch since 1996.
The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as VIX, slipped 3.9 percent to 14.41.
Utilities and phone shares in the S&P 500 advanced during the week, rising more than 1.1 percent as a group. Energy stocks rallied 2.5 percent to lead gains after oil climbed to a three-week high.
Facebook fell 11 percent to $60.01. The world’s largest social network agreed to buy Oculus, which makes a ski-goggles-like device called Rift that people wear to play games and access other immersive virtual-reality experiences. The stock is up 135 percent in the past year.
Netflix posted the biggest decline in the S&P 500, tumbling 12 percent to $358.87, on concern it may face increased competition. Apple Inc. is in talks with Comcast Corp. for a streaming TV partnership, the Wall Street Journal reported, citing people it didn’t identify.
King slumped 20 percent to $18.08. The company raised $500 million in its initial public offering, pricing the shares in the middle of the marketed range.
Citigroup dropped 5.7 percent to $47.25, its worst weekly performance since May 2012. The lender was among five banks that failed Fed stress tests, while Goldman Sachs Group Inc. and Bank of America Corp. passed only after reducing their requests for buybacks and dividends.
Vertex Pharmaceuticals Inc. tumbled 8.2 percent to $67.80 for the biggest drop among biotechnology shares in the S&P 500. Alexion Pharmaceuticals Inc., maker of the rare-disease drug Soliris, retreated 6.5 percent to $149.42.
BlackBerry Ltd. (BBRY) tumbled 8.4 percent to $8.41, a fourth week of losses. The smartphone maker said sales won’t grow until the fiscal year that begins next March, even after cost-cutting helped the company post a smaller quarterly loss than analysts estimated.
To contact the editors responsible for this story: Lynn Thomasson at firstname.lastname@example.org Jeff Sutherland