Wall St drops as biotech, semiconductor stocks stumble

Dow ends down 1.11%, S&P 500 declines 0.9%

US stocks fell on Wednesday, with losses accelerating after short-term technical indicators failed, while recent winners stumbled as investors cashed in towards the end of the quarter after a gauge of industrial orders unexpectedly fell last month.

Losses on the S&P 500 accelerated around mid-session after the benchmark dropped below a support level near 2,085, but managed to hold above its 50-day moving average around 2,067.

"It's the 50-day if there is anything technical involved right now. The 50-day is at 2,067, we bounced right off of that," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.

 

Semiconductors and biotech stocks were among the worst performers, on track for a third straight session of declines after strong gains in the prior week.

An index of biotechnology shares was down 3.3% for the session and on track to close below its 14-day average for the first time since Feb. 11. The PHLX semiconductor index was off 3.9% and on pace for its biggest percentage decline since Oct 10.

"The thing about those guys is they are typically high-beta, so they tend to go up faster when things are going up and down faster when things are going down," said Frederick.

An earlier government report showing a drop in durable goods orders pushed the dollar index lower, giving initial support to equities as it eases fears that the rally in the US currency will hurt corporate earnings. However, with valuations stretched as stock indexes trade near record highs, strong data is needed to justify valuations.

The Dow Jones industrial average fell 200.69 points, or 1.11%, to 17,810.45, the S&P 500 lost 18.65 points, or 0.89%, to 2,072.85 and the Nasdaq Composite dropped 85.75 points, or 1.72%, to 4,908.98.

Kraft Foods surged 34.3% to $82.37 after a merger agreement with ketchup maker H.J. Heinz Co, owned by 3G Capital and Berkshire Hathaway . Kraft Heinz Co will trade publicly and will be the third-largest food company in North America. Berkshire shares slipped 0.2% to $143.99.

Kofax Ltd rallied 46% to $10.95 after Lexmark International , known for its printers, said it would buy Kofax in a deal of about $1 billion that would double the size of its enterprise software business. Lexmark shares climbed 5.7% to $43.13.

Declining issues outnumbered advancing ones on the NYSE by 2,042 to 962, for a 2.12-to-1 ratio; on the Nasdaq, 2,082 issues fell and 597 advanced, for a 3.49-to-1 ratio.

The benchmark S&P 500 was posting 11 new 52-week highs and 1 new low; the Nasdaq Composite was recording 59 new highs and 27 new lows.