Tech Declines Cut Into U.S. Stock Market Gains

By Dow Jones Business News, 
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By Alexandra Scaggs

U.S. stocks undid early gains by midday Wednesday, as declines in technology stocks dragged down broader benchmarks.

The Dow Jones Industrial Average edged up 24 points, or 0.1%, to 17091. The S&P 500 index slipped two points, or 0.1%, to 2001 and the Nasdaq Composite Index dropped 27 points, or 0.6%, to 4572.

Shares initially rose on the heels of gains in Europe and Asia, but pared those gains midday, as tech stocks weighed on U.S. benchmarks. The tech sector of the S&P 500 fell 0.8%.

Apple slid 4.3%, one week before it is expected to unveil its latest iPhone, and as competitor Samsung launched a new product. One Wall Street analyst warned that he might downgrade Apple's stock unless next week's event includes " massive" opportunities for profit.

"Investors really want to play it safe coming into something like that," said Jonathan Corpina, senior managing partner at Meridian Equity Partners. "Then the rest of the sector gets pulled down, too."

European markets rallied as Russian President Vladimir Putin confirmed that he and Ukrainian President Petro Poroshenko had agreed to the outlines of a cease-fire between Ukrainian forces and pro-Russian rebels fighting in eastern Ukraine. The Stoxx Europe 600 Index gained 0.6%. Germany's DAX Index rose 1.1%.

The Ukraine conflict "definitely has been a drag on the European economy, and Europe is a big part of the global economy," said Paul Zemsky, chief investment officer at Voya Investment Management. So "if that gets cleared up the market can go higher."

Investors like Mr. Zemsky are now looking ahead to Thursday's statement from the European Central Bank.

"It's a big, big meeting," he said. Recent statements from ECB President Mario Draghi have boosted investor hopes that the central bank would take steps to stimulate the region's economy, he said, so "if he doesn't come up with something, people will just throw up their hands and dismiss Europe as an asset class for a while."

His fund has been making incremental additions to its holdings of European stocks, as a bet that the conflict in Ukraine won't cause lasting damage to the region's economy. But he remains downbeat on the prospect of gains in the region, particularly compared with the U.S.

U.S. stocks ended mostly lower on Tuesday, with the Dow falling 0.2% to 17067.56 and the S&P down 0.05% to 2002.28. The Nasdaq Composite rose 0.4% to 4598.19.

The S&P 500 has completely recovered from its mid-July swoon, caused in part by a flare-up in conflicts in the Middle East and Ukraine. The Dow isn't far behind, off 0.4% from its July 16 record close.

Many investors say improving economic data and low yields on U.S. Treasurys should continue to boost the appeal of stocks.

"When you get rid of this day-to-day noise, you're looking at a pretty decent outlook for global growth," said Geoffrey Pazzanese, who manages $600 million in international stocks for Federated Investors.

He still expects growth in the U.S. to be stronger than other economies, so his fund has been buying shares of companies that export products, such as German car makers.

A report on factory orders in July showed a 10.5% increase, nearly in line with the 11% increase expected by economists surveyed by The Wall Street Journal.

Asian stocks finished mostly higher, boosted by positive Chinese data. The HSBC China services purchasing managers index for August rose to a 17-month high.

U.S. Treasury prices fell, with the yield on the benchmark 10-year note edging up to 2.426%, according to FactSet.

In other corporate news, Netflix has reached an agreement with Time Warner's Warner Bros. to secure streaming rights for the TV show "Gotham, " marking the latest major content acquisition by Netflix, The Wall Street Journal reported. Netflix shares rose 0.6% and shares of Time Warner were up 0.5%.

Delta Air Lines fell 5.4% after it reported that passenger revenue per seat was at the lower end of its forecasts and cut its projections for its third-quarter operating margin. The airline has rallied 42% so far this year.

In commodity markets, crude-oil futures rose 1.8% to $94.54 a barrel. Gold futures gained 0.3% to $1,268.50 an ounce.

Write to Alexandra Scaggs at alexandra.scaggs@wsj.com


  (END) Dow Jones Newswires
  09-03-141220ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


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