Two Tech Stocks Hit by Sell-Offs
The Dow Jones Industrial Average was seven points above breakeven as of 11:30 a.m. EST. Dow Jones component Verizon Communications was a notable underperformer, while tech stocks Progress Software and FireEye experienced sharp sell-offs.
Jobs data suggests improving U.S. labor market
Friday's nonfarm payroll report was likely contributing to the Dow Jones' early rally, which tapered off in later morning. According to the Bureau of Labor Statistics, 175,000 jobs were created last month, more than the 149,000 economists had anticipated.
The monthly nonfarm payroll report is widely regarded as the best measure of the U.S. labor market. A stronger than expected report suggests that jobs market is improving, a positive sign for the U.S. economy, and by extension, the stock market.
Verizon was one Dow Jones component not participating in Friday's rally. The 1% move lower didn't coincide with any major news reports, meaning it likely amounts to random noise, but investors may have been digesting a few headlines from earlier in the week.
Reports suggested that Verizon is working on an Internet TV service that would be available to customers outside of its FiOS network. While nothing concrete has emerged, it would fit with Verizon's recent purchase of Intel's OnCue assets. In the near term, it might not have a significant effect on Verizon's business, but could help the company grow its customer base.
Progress Software drops on earnings
Verizon's move lower was nothing compared to Progress Software's -- shares of the tech company fell nearly 10% early on Friday following a disappointing earnings outlook.
Progress Software expects to report earnings of just $0.27 or $0.28 per share this quarter, on sales of $74 million to $75 million. Analysts had forecast earnings of roughly $0.31 per share on sales of $81.3 million.
FireEye falls on secondary offering
FireEye shares were also down nearly 10%. Thursday evening, the company priced a secondary offering of 14 million shares at just $82 per share -- far below Thursday's closing price near $90.
Secondary offerings almost always weigh on a stock, as they can dilute existing shareholders. In FireEye's case, it was particularly bad, as the offering was priced under below its market value. However, long-term shareholders might view the activity as a positive, as it raises money for the company, allowing FireEye to expand its operations and target new growth markets.
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