The Nasdaq composite slid and finished much weaker than other major indexes after Alphabet stock gapped down sharply on Q1 sales that missed expectations.
XThe Nasdaq lost 0.7%, clearly lagging other indexes even after paring some losses. Small caps also lagged, with the Russel 2000 off 0.5%. The S&P 500 and Dow Jones Industrial Average rose 0.1% as both closed near session highs.
Volume rose on the NYSE and Nasdaq, according to unconfirmed figures. Breadth diverged, as rising stocks led decliners by a 6-5 ratio on the NYSE, but losers led winners on the Nasdaq by 3-to-2.
Alphabet (GOOGL) stock plunged 8% to close near the 50-day moving average. The stock erased a modest gain from the 1,236.53 buy point and finished about 3% below the entry. Late Monday, the parent company of Google reported first-quarter sales of $36.34 billion, below the consensus estimate for $37.33 billion. After management's conference call, some analysts blasted the company for evasive answers about the sales miss.
The earnings risk doesn't get any easier, with Apple (AAPL) announcing results after 4 p.m. ET. Analysts expect Apple to earn $2.37 a share on $57.55 billion in sales. A breakout past a 197.79 buy point came from a flawed wedging handle, and the stock is erasing modest gains from it.
Tech Stock Breaks Out
Sanmina (SANM) broke out of an undefined base, clearing a 34 buy point in heavy volume. The manufacturing outsourcing company beat profit expectations, posting a second straight quarter of high-double-digit earnings growth.
The Innovator IBD 50 ETF (FFTY) was flat. A mix of technology stocks and real estate investment trusts led the IBD 50. That offset weakness in some cyclical, media and construction stocks.
In fact, it was a guarded day for stock investors, as defensive sectors such as utilities, consumer staples and real estate led the market. IBD's homebuilding industry group rose more than 1%, and iShares U.S. Home Construction ETF (ITB) climbed 0.4%.
The S&P communications services sector was the weakest. The Communication Services Select Sector SPDR Fund (XLC), where Alphabet is the second-largest holding, slid 2.2%.
Juan Carlos Arancibia is the markets editor of IBD and oversees our market coverage. Follow him at @IBD_JArancibia
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