Wall Street cools as Intel, transport results disappoint

By Lewis Krauskopf

(Reuters) - Wall Street cooled off on Thursday as disappointing results from tech stalwart Intel and from transportation companies stalled momentum in a U.S. corporate reporting season that has been better than feared.

The S&P 500 and Dow industrials pulled back from record highs and the Dow was set to snap a nine-session streak of gains.

Southwest Airlines fell 11.1 percent and led other airline stocks lower after the company forecast a drop in a key profitability metric. Union Pacific dropped 2.8 percent after the No. 1 U.S. railroad posted a lower quarterly net profit, hurt by slumping freight volumes.

 

The stocks dragged down the Dow Jones Transport index <.DJT>, which is often seen as a barometer of the market's health and the overall economy.

"You've got some weakness in that important group, and the broader market might be taking some cues from that," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

The Dow Jones industrial average <.DJI> fell 105.43 points, or 0.57 percent, to 18,489.6, the S&P 500 <.SPX> lost 10.06 points, or 0.46 percent, to 2,162.96 and the Nasdaq Composite <.IXIC> dropped 20.00 points, or 0.39 percent, to 5,069.94.

The recent rally has pushed the S&P 500 to fresh all-time records after failing to reach such highs for more than a year, putting the benchmark index up nearly 6 percent in 2016.

"The market is just tired," said Stephen Massocca, chief investment officer of Wedbush Equity Management in San Francisco. "It's had a massive move in a straight line and so it is only natural to see some pullback here."

Intel shares fell 4.8 percent. The world's largest chipmaker reported slower revenue growth at its data centre business. Rival Qualcomm fared better, with shares rising 7.5 percent after it reported strong demand for its mobile chips in China.

Second-quarter earnings for S&P 500 companies, which have started reporting results in earnest this week, are expected to fall 3.3 percent, less severe than the 4.5 percent decline estimated at the start of the month, according to Thomson Reuters I/B/E/S.

"The results up to this point in the macro sense have been pretty good," Carlson said.

Eight of the 10 major S&P sectors were lower in afternoon trading. Healthcare <.SPXHC> eked out gains, helped by a 6.8-percent rise in Biogen after the biotechnology company's strong report.

Declining issues outnumbered advancing ones on the NYSE by a 1.50-to-1 ratio; on Nasdaq, a 1.74-to-1 ratio favoured decliners.

The S&P 500 posted 24 new 52-week highs and no new lows; the Nasdaq Composite recorded 74 new highs and 17 new lows.

(Additional reporting by Chuck Mikolajczak in New York and Tanya Agrawal in Bengaluru; Editing by Savio D'Souza and Nick Zieminski)