July 24 (Bloomberg) -- U.S. stocks fell from the highest levels of 2009 as Microsoft Corp. and Amazon.com Inc. posted disappointing results, while rebounding oil and natural gas drove up energy companies.
Microsoft declined 9 percent, the most since January, on lower profit and sales than analysts estimated. Amazon.com slumped 8.6 percent following price cuts that caused the online retailer’s revenue to miss projections. Exxon Mobil Corp. and ConocoPhillips gained as fuel prices headed toward their highs of the day.
The Standard & Poor’s 500 Index dropped 0.4 percent to 972.76 at 1 p.m. in New York after losing as much as 1.1 percent. The Dow Jones Industrial Average fell 26.98 points, or 0.3 percent, to 9,042.31. U.S. stocks surged yesterday, sending the Dow above 9,000 for the first time since January.
“At these levels in the market, there’s not a lot of room for error,” said Mark Freeman, who helps manage $7.5 billion at Westwood Management Corp. in Dallas. “Anything that deviates brings about a reevaluation by the market.”
Microsoft and Amazon.com’s worse-than-estimated results followed two weeks of earnings reports that beat projections. Among S&P 500 companies that posted second-quarter results through yesterday, 74 percent exceeded the average analyst forecast, according to data compiled by Bloomberg. That would be the highest rate for a full quarter on record, Bloomberg data going back to 1993 show. More than 300 S&P 500 companies have yet to report for the period.
Windows Demand Waning
Microsoft, the biggest software maker, fell 9 percent to $23.26 after a 29 percent drop in fiscal fourth-quarter earnings and posted sales that missed analysts’ estimates, a sign that demand for Windows and Office software is still declining. Per- share profit excluding some items was 36 cents, missing the average forecast by 2.4 percent.
Technology shares in the S&P 500 fell 1.4 percent, the most among 10 industries, a day after rising to the highest level since September on EBay Inc.’s better-than-estimated earnings. MEMC Electronic Materials Inc., the maker of silicon wafers for solar modules, lost 11 percent to $18.53. Its second-quarter profit declined 96 percent on low prices and weak demand.
Amazon.com lost 8.6 percent, the most since November, to $85.77. The world’s largest Internet retailer has sought to ward off competitors by cutting prices and adding products, such as laptops and outdoor equipment. Its low prices and free-shipping offers have started to eat into profit, said Aaron Kessler, an analyst at Kaufman Brothers LP. Sales of $4.65 billion were 1 percent less than analysts estimated on average.
Reversing Its Decline
American Express rose 0.4 percent to $29.57 after falling as much as 4.6 percent, which helped drive down the Dow average. The credit-card issuer reported second-quarter sales of $6.09 billion, or 1.4 percent less than analysts projected. Net income from continuing operations decreased 48 percent to $342 million.
Stock-index futures advanced earlier after Europe’s economy moved closer to recovery as the manufacturing and service industries contracted at the slowest rate since August and German business confidence climbed to a nine-month high. Later, a Reuters/University of Michigan index showed confidence among U.S. consumers fell in July for the first time in five months as mounting unemployment and stagnant wages shook households.
Losses in the stock market were diminished as energy companies rebounded from their lows of the day. Crude oil for September delivery added 0.2 percent to $67.30 in New York after falling 1 percent. Natural gas futures expiring next month climbed 3.1 percent to $3.66 per million British thermal units.
‘Ships Will Sink’
Exxon added 0.4 percent to $71.88. ConocoPhillips rose 1.6 percent to $44.71.
Yesterday, the S&P 500 climbed to the highest level since President Barack Obama was elected on Nov. 4 and the Nasdaq Composite Index advanced for the 12th straight day, its longest winning streak since 1992. Following the rally, S&P 500 companies traded for 16.2 times operating earnings from the past year, the most expensive since September.
“Investors have gotten the market ahead of itself,” said Andrew Seibert, who manages about $400 million at Pittsburgh- based Nextier Wealth Management. “You have to be very cautious. This tide may raise all ships initially, but some ships will sink because they can’t follow through on the exuberance.”
Chubb Corp., the insurer of high-end homes and corporate boards, advanced 6.5 percent to $45.36, leading an industry rally. Second-quarter profit at Chubb beat analysts’ estimates and the company raised its 2009 forecast.
Black & Decker jumped 10 percent to $37.14. The largest maker of hand tools posted second-quarter profit of 63 cents a share, beating the average analyst estimate by 74 percent.
Sepracor Inc., the maker of the top-selling sleep drug Lunesta, advanced 4.1 percent to $16.46 after increased its profit forecast for the current fiscal year to a range of $2.55 to $2.90 a share, exceeding the $2.52 average analyst estimate in a Bloomberg survey.
SunPower Corp. rallied 24 percent to $30.80 after the second-biggest U.S. solar-cell maker reported an unexpected quarterly profit and boosted its sales forecast for the year.
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