U.S. Stocks Slide as Tech Sector Remains Under Pressure
June 27 2017 - 4:47PM
Dow Jones News
By Akane Otani and Riva Gold
U.S. stocks retreated Tuesday, weighed down by declines in the
shares of technology companies.
Stocks' losses accelerated in afternoon trading, pulling 10 of
the 11 sectors in the S&P 500 lower. Financial stocks jumped
with government bond yields, while technology stocks -- one of the
leaders in the stock market this year -- were among the
worst-performing sectors in the broad index.
The day's moves marked another retreat for the technology
sector, which has rallied in 2017 as investors bet on companies
viewed as having high growth potential. Recent losses have pulled
the sector down 2.1% in the S&P 500 for the month.
Some traders said the delay of a vote on Senate Republicans'
health-care overhaul was adding to concerns about the prospects for
President Donald Trump's agenda. Expectations of tax cuts, fiscal
stimulus and infrastructure spending helped stocks climb after the
November presidential election.
"Investors want this signed so we can move on to tax reform,"
said R.J. Grant, director of equity trading at KBW Inc.
The Nasdaq Composite fell 1.6%. The Dow Jones Industrial Average
dropped 99 points, or 0.5%, to 21311, and the S&P 500 dropped
0.8%.
Shares of Google parent Alphabet fell 2.5% Tuesday after the
European Union's antitrust regulator fined Google EUR2.42 billion
($2.71 billion) for favoring its own comparison-shopping service in
search results. Chip maker Nvidia dropped 3.7%, and Microsoft shed
1.9%.
"Google's had a nice run, and I think there are people taking
off some exposure from the space prior to the month-end," said
Mohit Bajaj, director of ETF trading solutions at WallachBeth
Capital.
Rising government bond yields rippled through the stock market,
after European Central Bank President Mario Draghi expressed
confidence that eurozone inflation would ultimately pick up as
growth broadens, and hinted that the bank might start winding down
its large monetary stimulus.
Utilities shares, which are often thought of as bond proxies
because they pay relatively high dividends, fell 1.3% in the
S&P 500 as U.S. government bonds weakened.
Meanwhile, financial stocks in the index rose 0.9%. Higher rates
tend to boost net-interest margins, a key measure of lending
profitability.
The yield on the 10-year U.S. Treasury note climbed to 2.198%,
according to Tradeweb, from 2.135% Monday. Yields rise as bond
prices fall.
Earlier, European government bond yields and the euro rose after
Mr. Draghi's speech. Some investors and analysts have expressed
concern about central banks tightening policy while inflation data
remains soft.
"You can clearly see a disconnect between markets and central
banks [on the strength of inflationary pressures]" said Florian
Ielpo, head of macro strategy at Swiss fund manager Unigestion.
The euro climbed 1.4% to $1.1339. The Stoxx Europe 600 dropped
0.8%, with technology and utilities shares among the biggest
decliners.
Brazil's Bovespa Index shed 0.6% and the real fell 1% against
the dollar after the country's top prosecutor filed charges of
corruption against President Michel Temer. Mr. Temer has previously
denied any wrongdoing and has said he wouldn't step down from the
presidency.
Korea's Kospi edged up 0.1% to another record close, while
Japan's Nikkei added 0.4% following an earlier decline in the yen
against the dollar.
Write to Akane Otani at akane.otani@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
June 27, 2017 16:32 ET (20:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.