U.S. Stocks Fall as Biotech, Media Shares Tumble Amid Earnings

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The Standard & Poor’s 500 Index declined for the fourth time in five sessions, as biotechnology shares tumbled while media companies sold off on disappointing results from Viacom Inc. and Twenty-First Century Fox Inc.

The Nasdaq Biotechnology Index dropped 4 percent, snapping a five-day winning streak. Viacom and Fox slumped at least 6.4 percent after joining a parade of media companies reporting disappointing results. Keurig Green Mountain Inc. plunged 30 percent after cutting its sales and profit forecasts. Transocean Ltd and Michael Kors Holdings Ltd. added at least 10 percent after posting better-than-estimated results.

The S&P 500 lost 0.8 percent to 2,083.56 at 4 p.m. in New York, falling below its average prices during the past 50 and 100 days. The Dow Jones Industrial Average fell 120.72 points, or 0.7 percent, to 17,419.75. The Dow fell for a sixth day, its longest losing streak since October. The Nasdaq Composite Index decreased 1.6 percent, the most in almost a month.

“It’s like panic buying and panic selling,” said Walter Todd, who oversees about $1.1 billion as chief investment officer for Greenwood Capital Associates. “The reactions you’re seeing in the marketplace are just very violent for companies reporting earnings, sometimes to the upside, sometimes to the downside.”

Media shares were battered for a second day, with quarterly earnings marked by shrinking U.S. ad sales and profits propped up by stock buybacks. Viacom, owner of MTV, Nickelodeon and Comedy Central, posted a third-quarter revenue decline that was wider than analysts had forecast.

Media Selloff

Walt Disney Co. slid another 1.8 percent after tumbling 11 percent Wednesday following its results. The shares marked their worst back-to-back drop in more than six years. The Bloomberg U.S. Media Index lost 2 percent for its biggest two-day decline since September 2011.

Media stocks have been the darlings of the U.S. bull market that began 6 1/2 years ago. Since global equities bottomed in March 2009, the 15-member S&P 500 Media Industry Index had risen 464 percent, second only to automakers. Within the gauge, CBS and Tegna Inc. -- up more than 15 fold over the period -- are among companies with the 20 biggest gains.

About 85 percent of S&P 500 members have released earnings figures, with three-quarters beating profit estimates and half topping sales projections. Analysts now call for a 2.8 percent drop in second-quarter earnings, shallower than July 10 estimates for a 6.4 percent fall.

July Payrolls

Along with corporate earnings, investors are also watching economic reports to gauge when the Fed will increase interest rates. A report today showed jobless claims rose by 3,000 to 270,000, hovering near four-decade lows as employers hold on to more workers in response to increased demand following a slump in early 2015.

Friday’s monthly payroll data will be parsed for indications on the likelihood of a September rate increase, with a particular interest in any signs of stronger wage growth. The government’s report is projected to show employers took on 225,000 workers last month, while the jobless rate held at a seven-year low of 5.3 percent.

“If the number is above 225,000 and there are signs of wage pressure, then good news will certainly be met with a negative response,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey.

The S&P 500 snapped a three-day losing streak Wednesday amid better-than-expected earnings from technology companies. The gauge is coming off its best monthly gain since February, and closed Thursday 2.2 percent below its record set in May.

Biotechs Sink

The Chicago Board Options Exchange Volatility Index rose 10 percent Thursday to 13.77. The gauge, known as the VIX, in July posted its biggest monthly drop since February, down more than 33 percent. About 7.8 billion shares traded hands on U.S. exchanges, 21 percent above the three-month average.

Eight of the S&P 500’s 10 main groups fell, with media shares pushing the consumer discretionary group down 1.3 percent, while biotechs dragged health-care 2.1 percent lower. Energy shares advanced 1.6 percent, despite oil’s retreat to its lowest in more than four months.

Allergan Plc lost 5.1 percent, the most since October. The drug maker’s Actavis unit received a subpoena from the U.S. Justice Department seeking information on the marketing and prices of its generic drugs. Amgen Inc., Celgene Corp. and Biogen Inc. decreased at least 3.5 percent.

Among consumer discretionary companies, Viacom plummeted 14 percent, the biggest drop in more than six years, sending shares to their lowest since December 2011. Fox sank 6.4 percent, paring an earlier 14 percent drop, to a two-year low. Time Warner Inc. slid 0.8 percent, nearly erasing an earlier 7 percent fall, after a 9 percent loss Wednesday following its results.

Teradata, Tesla

Teradata Corp.’s 16 percent decline led technology shares lower. The database management company cut its profit outlook, sending the stock to its lowest level in almost five years. Chipmakers Qorvo Inc. and Skyworks Solutions Inc. sank more than 3.4 percent. Microsoft Corp. fell for the first time in four sessions, losing 2 percent.

Tesla Motors Inc. slumped 8.9 percent, its largest retreat since September. Chief Executive Elon Musk dialed back his forecast for 2015 vehicle deliveries, saying that getting Tesla’s new sport utility vehicle’s middle-row seats just right is proving thornier than expected.

Transocean Ltd. climbed 11 percent, the most since April to pace gains in energy. The world’s largest offshore rig owner posted earnings that exceeded expectations after cutting costs to confront declining demand for drillships. Chevron Corp. and Exxon Mobil Corp. rose for the first time in six days, up at least 1.2 percent to lead the Dow.

Herbalife Jumps

Chesapeake Energy Corp. soared 17 percent, the biggest gain since October. The company is in discussions to sell more assets or stakes in oil fields as the prospect of a prolonged energy-market slump imperils cash flow.

CF Industries Holdings Inc. rose 2.2 percent, after agreeing to acquire European and North American assets from OCI NV for about $8 billion. CF said the deal will create the world’s largest publicly traded producer of nitrogen fertilizer.

Herbalife Ltd. climbed 17 percent to its highest in a year. The nutrition company that’s battling hedge fund manager Bill Ackman had a second-quarter profit that beat analysts’ estimates, and it raised its forecast for the year, helped by sales gains in China.

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