Wall Street lower ahead of Fed decision

Facebook dropped to yet another all-time low on Tuesday ahead of the expiry of a lock-up written into the IPO that will release new shares on to the market in mid-August.

Shares in the social networking site shed 6.2 per cent to close at $21.71. The stock has plummeted 42.9 per cent since it went public in May.

Still, many analysts continue to view the company as having strong fundamentals.

Herman Leung, analyst at Susquehanna, said: “Lockups are not about the long-term view. They don’t change the fundamentals of the stock, which remains strong. But the market does tend to see increased supply as a problem when a stock price is already down.”

Echoing this sentiment Carlos Kirjner, an analyst at Bernstein Research, said: “While the lock-ups are well-known facts and should, in theory, be already reflected in the stock price, history suggests that there is a good chance of transient pressure on the stock price as liquidity increases abruptly.”

Among the 70.3 per cent of Facebook shares remaining under five lock-ups set to expire within a year of the IPO, 44.2 per cent are scheduled to be released on to the market in November.

The technology-heavy Nasdaq Composite Index decreased 0.2 to 2,939.52, but has posted a monthly gain of 0.2 per cent.

Apple , the most heavily weighted stock in the S&P 500 and the Nasdaq Composite, rose 2.6 per cent to $610.76. The iPad and iPhone maker gained 4.6 per cent over the course of July even though it missed its second-quarter revenues and earnings forecasts.

Shares in Advanced Micro Devices, one of the worst performers for the month, decreased 1 per cent to $4.06 yesterday. The stock price of the PC microprocessor maker lost 29.1 per cent in July on sluggish global demand.

Overall, US equities pointed lower ahead of the central bank policy meetings this week, with investors keen for more stimulus, particularly from the Federal Reserve. The S&P 500 closed 0.4 per cent lower to 1,379.33 but registered a 1.3 per cent gain over July, even as investors remained anxious about Europe’s ongoing debt crisis.

Many companies reported worse-than-expected quarterly revenues this month on the back of these eurozone woes. Worries about Europe pushed shares in domestically focused US companies to outperform those of multinationals on the S&P 500 by the greatest margin in a year.

Of the 10 S&P 500 sectors, the defensive telecommunications index was July’s leader, rising 5.5 per cent.

Sprint Nextel , the US mobile operator, was one of the best performers on the S&P 500 this month. The stock gained 33.7 per cent, although it fell 3.3 per cent to $4.36 yesterday.

Other telecom stocks moved up. AT&T rose 1.3 per cent to $37.92, with a monthly gain of 6.3 per cent. Verizon added 0.4 per cent to $45.14 and went up 1.6 per cent for the month.

The Dow Jones Industrial Average declined 0.5 per cent to 13,008.66. The index has gained 1 per cent over the past month.

Pfizer added 1.4 per cent to $24.04. The world’s largest drug company by revenues reported better than expected quarterly earnings due to cost-cutting.

The weak momentum of some companies, such as Alcoa and Dupont , weighed on the blue-chip heavy index as those firms have a larger exposure to lacklustre global growth.

Alcoa, the multinational aluminium company which reported weak quarterly results earlier this month, inched up 0.2 per cent to $8.47. But the stock lost 3.2 per cent in July.

DuPont edged up 0.1 per cent to $49.70 and dropped 1.7 per cent over the month, as investors worried about the negative impact of slowing global demand on the chemical company.

The materials index, meanwhile, was one of the subgroups that traded in negative territory over the past month, dropping 1.3 per cent.

Elsewhere, shares in Coach slumped after the maker of leather goods missed market estimates with its quarterly sales.

The poor results sent the stock 18.6 per cent lower to $49.33 yesterday.

The company said same-store sales rose by 1.7 per cent. However, the figure was far below analysts’ estimates of a 6.5 per cent increase. The consumer discretionary index, which includes Coach, was the laggard on Wall Street yesterday, down 1.2 per cent.

Tiffany & Co , the luxury jewellery retailer, dropped 4 per cent to $54.93.