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Monday May 27th, 2019 3:38AM

Video game companies lead modest slide in US stocks

By The Associated Press
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A mixed bag of corporate earnings nudged U.S. stocks slightly lower Wednesday, snapping the market's five-day winning streak.

Communications sector stocks, led by steep declines in video game companies, accounted for most of the market's slide. Take-Two Interactive and Electronic Arts plunged after reporting earnings that fell far short of what Wall Street analysts were expecting. The companies also issued weak forecasts, citing tougher competition.

Gains in technology stocks offset some of those losses, with Skyworks Solutions leading a rally in semiconductor companies.

"This is an earnings-driven market, and where you've seen both positive and negative price movement today it has largely been sector and industry specific," said Paul Springmeyer, head of investments at U.S. Bank Wealth Management. "On balance, sales and earnings are really trending mostly above expectations."

The Dow Jones Industrial Average fell 21.22 points, or 0.1 percent, to 25,390.30. The S&P 500 index dropped 6.09 points, or 0.2 percent, to 2,731.61. The benchmark index finished higher the previous five days in a row.

The Nasdaq composite slid 26.80 points, or 0.4 percent, to 7,375.28. The Russell 2000 index of smaller companies gave up 2.20 points, or 0.1 percent, to 1,518.02. Major European indexes also finished lower.

More than half of the companies in the S&P 500 have already reported results for the last three months of 2018, and most have turned in earnings that beat analysts' forecasts.

"What we are seeing is earnings are in fact slowing, but they still remain positive," Springmeyer said.

That's helped to allay some investors' fears over a slowdown in growth. Still, broader economic concerns continue to shadow the market, including uncertainty over the U.S.-China trade dispute, the impact tariffs are having on profits and consumers' wallets, and signs of a general slowdown in global growth.

The latest quarterly snapshots from video game companies failed to impress traders Wednesday.

Take-Two, maker of the "Grand Theft Auto" and "Red Dead Redemption" games series, gave investors a weak outlook for the current quarter. Electronic Arts, whose titles include "The Sims" and various sports games, including "Madden NFL," flagged disappointing results in sales of its latest "Battlefield" game.

Both companies are grappling with competition from Epic Games Inc.'s hit game "Fortnite."

Take-Two and Electronic Arts plunged 13.8 percent and 13.3 percent, respectively. Activision Blizzard, maker of the "Call of Duty" and "Candy Crush" games, fell 10.1 percent.

A broad slide in homebuilder shares also weighed on the market. Hovnanian Enterprises led the pack with a 6.6 percent decline.

Traders bid up shares in several companies that reported improved quarterly results.

The company behind the popular photo-messaging app SnapChat surged 22 percent as advertising gains drove revenue growth in the fourth quarter. The revenue increase helped cut the company's losses. It also maintained its user base.

The New York Times vaulted 10.3 percent in heavy trading after the newspaper publisher touted a big gain in digital subscribers and digital revenue for the October-December quarter. The Times added 265,000 digital subscriptions in the fourth quarter. Its earnings and revenue topped Wall Street's forecasts.

Capri Holdings, owner of the Michael Kors, Jimmy Choo and Versace clothing and footwear brands, climbed 11.3 percent after reporting quarterly earnings that were far larger than analysts were expecting.

Skyworks Solutions jumped 11.5 percent after the semiconductor company announced a $2 billion stock buyback plan. The news sent shares in several chipmakers higher. Microchip Technology climbed 7.3 percent, while Micron Technology gained 5.5 percent.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Corporate News, AP Business - Financial Markets
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