Google found out just how jittery investors have become when they sent the company’s shares plunging in after-hours trading Thursday for results that were just shy of Wall Street estimates.
Google’s revenues after traffic acquisition costs rose 52% in the fourth quarter to $3.39 billion, just below $3.45 billion estimates. Earnings were $4.43 a share after adjustments, up from $3.18 a share in the year-ago quarter, but two cents below Thomson Financial forecasts.
That small miss was all investors needed to send shares of Google down big. The stock plunged 7% in after-hours trading, down more than $40 a share to $522. The stock’s yearly high was $747.24 set in November.
The news capped the worst-ever month of January for the Nasdaq, and the worst January for the rest of the market in at least 18 years. Stocks ended the month on a hopeful note, however, posting big gains despite continued worries about the health of bond insurers that could lead to more steep losses for financial firms. Top bond insurer MBIA said it remains financially sound, yet S&P placed the company on CreditWatch negative anyway, and federal and New York state officials are working to secure additional funding to shore up bond insurers.
The Federal Reserve has slashed interest rates by 1.25 points in a little more than a week, hoping to stem a credit market meltdown that is threatening to spread to the broader economy. One sign of economic weakness Thursday was a big jump in weekly jobless claims, coming a day before the U.S. Labor Department’s monthly jobs report.
Amazon.com gained 4.7% after initially trading lower on quarterly results that once again raised margin concerns. Audible soared 22% on news that Amazon will buy the company.
Cadence Design Systems, Datawatch, Harris Stratex and RightNow tumbled on their results.
TiVo soared 29% on a big patent win against Dish Network, and Interactive Intelligence surged 20% on its results.
The Nasdaq surged 40 to 2349, the S&P gained 22 to 1378, and the Dow rose 207 to 12,650. Volume rose to 5.32 billion shares on the NYSE, and 2.9 billion on the Nasdaq. Advancers led by a 25-8 margin on the NYSE, and 20-9 on the Nasdaq. Upside volume was 80% on the NYSE, and 77% on the Nasdaq. New highs-new lows were 31-93 on the NYSE, and 52-148 on the Nasdaq.