U.S. stocks fell Wednesday, with the Dow Jones industrial average breaking a four-day string of record closing highs, following the World Bank’s reduction of its global growth forecast.
The S&P 500’s drop of 0.4 percent was its biggest daily percentage loss since May 20. The benchmark index fell for the second day in a row, after four straight record-high closes.
The sell-off was broad. Every S&P-500 sector index except energy declined for the day.
Low volume and low volatility have marked recent sessions, leaving indexes to trade in a narrow range.
The World Bank’s lower growth forecast provided investors with a reason to unload some stocks. Late Tuesday, the World Bank cut its global economic growth forecast for 2014 to 2.8 percent from 3.2 percent because of a harsh U.S. winter and the effects of the Ukraine crisis.
“It’s pretty quiet. The only news investors are keying in on is the forecast of slightly lower global growth,” said Dan Veru, chief investment officer of Palisade Capital Management in Fort Lee, N.J., which oversees $4 billion.
“I think it’s an excuse for some investors to take some money off the table.”
The biggest drag on the S&P 500 was Bank of America (BAC.N), down 2.1 percent at $15.59. The bank has reached an impasse in negotiating a
multibillion-dollar settlement with the Justice Department related to the bank’s mortgage investments, according to the New York Times.
Facebook infringed on patents held by a Dutch computer programmer who tried to launch a similar site called “Surfbook” more than a decade ago, according to a lawsuit heard by a federal jury Wednesday.
The civil trial was underway in U.S. District Court in Alexandria, where social media giant Facebook is being sued by a holding company called Rembrandt Social Media.
The lawsuit alleges that a Dutch computer whiz, Joannes Van Der Meer, filed for patents in 1998, claiming methods for running a Web-based personal diary. The patents were issued in 2001 and 2002, before Facebook debuted in 2003.
But Van Der Meer’s Web site, Surfbook, never got off the ground. Van Der Meer died in 2004.
Facebook, which is based in Menlo Park, Calif., says the patents should never have been issued to Van Der Meer. The company argues that the ideas and methods put forward in Van Der Meer’s patents were obvious to people in the trade.
The company fought unsuccessfully for more than a year to keep the case from getting to a jury. And it is unusual for patent-infringement lawsuits to make it all the way to a federal jury trial. Jason Rantanen, a law professor at the University of Iowa who specializes in patent law, said that roughly 1 percent of the thousands of infringement lawsuits filed every year end up in that group.
— Associated Press
● Lululemon Athletica’s founder and biggest shareholder, Chip Wilson, lashed out at the yoga-wear retailer’s board Wednesday, saying he had voted against keeping the company’s new chairman and another director in their jobs because they are too focused on short-term growth. Just hours ahead of the company’s annual meeting in Vancouver, Wilson issued a news release that praised Lululemon’s new management team but said the board is “heavily weighted towards short-term results at the expense of product, culture and brand and longer-term corporate goals.” The company, which is pursuing international expansion in the face of growing competition, said in a statement that its board and management are committed to shareholder value.
● Takata’s safety crisis deepened Wednesday after Toyota recalled nearly 2.3 million vehicles globally, many for the second time, and the Japanese air-bag maker warned that further fixes may be needed. Toyota, the world’s largest automaker, called back more than 1.6 million vehicles outside of Japan that it recalled last year, as well as 650,000 more in Japan not previously recalled. The additional vehicles brought to more than 7 million the total number of cars equipped with Takata air bags to be called back worldwide over the last five years.
● Camera-maker GoPro said Wednesday that its upcoming initial public offering will be priced at between $21 and $24 per share, potentially raising as much as $427 million. The IPO could value the company at about $3 billion, analysts said. The wearable-camera company has achieved great success among consumers, who have embraced its clip-on cameras to record everything from trips down a zip line to some truly epic cat videos. The devices, originally conceived by chief executive Nick Woodman to be used for surfers, have become the go-to devices for those with an active lifestyle who want to share their adventures with the world. GoPro has not released any information on the timing of its IPO.
● The U.S. Supreme Court denied a request from former Goldman Sachs director Rajat Gupta to delay the June 17 start of his two-year prison term while he pursues an appeal of his insider-trading conviction. ●
— From staff reports
and news services
● 8:30 a.m.: Retail sales report.
● 8:30 a.m.: Import-export prices report.
● ● Earnings: Lands’ End, Lululemon