NEW YORK — Technology shares weighed on the U.S. stock market Friday after Research In Motion Ltd.’s disillusioning outlook. Yet technology overall remains a bright spot, with upward revisions to the sector’s estimated earnings growth for the current quarter helping offset declines elsewhere.
On Wall Street, the major indexes ended lower for the first week in three, with consumer discretionary shares fronting the losses. The Dow Jones industrial average ended at 9,665.19, off 42.25 points, or 0.4 percent, giving the blue chips a weekly loss of 1.6 percent. The S&P 500 Index fell 6.40 points, or 0.6 percent, to 1,044.38, a level that translates into a 2.2 percent drop from the week-ago close. The tech-rich Nasdaq Composite Index fell 16.69 points, or 0.8 percent, to stand at 2,090.92, off 2 percent for the week.
After a six-week runup, shares of the BlackBerry maker lapsed more than 17 percent, with analysts voicing worry about the company’s expectations. At least three brokers trimmed their view of the stock.
The results were not well received, in light of how so-called smartphones “have grown smartly, even though the cellphone business hasn’t grown so much this year,” said Benny Lorenzo, chairman of Kaufman Brothers, an investment bank.
“Investors had been looking for some upbeat commentary, especially about the hot mobile-device items,” Marc Pado, market strategist at Cantor Fitzgerald, wrote in a note.
Research In Motion had rallied into its earning report, which came after Thursday’s close, with shares of the company climbing from about $70 in mid-August to $88 on Wednesday.
“We were looking for some earnings disappointments and ‘sell on the news’ type action in the middle of October. This is an early report, but suggests market vulnerability,” Pado said.
Apple Inc. may be stealing market share from Research In Motion, but the latter’s results are particularly disheartening because they make end demand for its products “look questionable,” said Nick Kalivas, MF Global Research.
Research In Motion aside, the estimated earnings growth for the overall S&P 500 for the third quarter now stands at negative 24.7 percent compared with an estimated growth rate of 20.9 percent on July 1, according to Reuters.
“Since the start of the quarter, the decrease in the third-quarter 2009 growth rate can be attributed to both share-count increases for Citigroup and downward revisions to estimates for companies in the financials, industrials and energy sectors, partially offset by upward revisions to estimates for companies in the information-technology and consumer-discretionary sectors,” wrote John Butters, director of U.S. earnings at Thomson Reuters, in a research report Friday afternoon.
