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Nasdaq Slides as Tech Sector Remains Under Pressure

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06/27/2017 | 07:52pm CEST
By Akane Otani and Riva Gold 

U.S. stocks fell Tuesday, weighed down by declines in the shares of technology companies.

Stock losses accelerated in afternoon trade, pulling nine 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.

Shares of Google parent Alphabet fell 1.4% 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 2.5%, and Microsoft shed 1.1%.

The day's moves marked another retreat for the technology sector, which has rallied in 2017 as investors have flocked to companies viewed as having high growth potential. Recent losses have pulled the sector down 1.3% in the S&P 500 for the month.

"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.

The Nasdaq Composite fell 0.7%, on course to post losses for a second consecutive session. The Dow Jones Industrial Average slipped 3.8 points, or less than 0.1%, to 21405, and the S&P 500 edged down 0.2%.

Financial stocks rallied Tuesday. The KBW Nasdaq Bank Index of U.S. commercial lenders rose 1.6%, while the yield on the 10-year U.S. Treasury note climbed to 2.210%, according to Tradeweb, from 2.135%. Higher rates tend to benefit banks since they boost their net-interest margins, a key measure of lending profitability.

Elsewhere, European stocks were mostly lower, while a speech from European Central Bank President Mario Draghi lifted the euro and government bond yields.

The euro climbed 1.1% to $1.1312 after Mr. 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.

The Stoxx Europe 600 dropped 0.8%, with technology shares among the biggest decliners.

"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.

Elsewhere, Brazilian markets were relatively calm after the country's top prosecutor filed charges of corruption against President Michel Temer. Brazil's Bovespa Index edged up 0.3% and the real fell 0.6% against the dollar. 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 [email protected] and Riva Gold at [email protected]

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.03% 25058.12 Delayed Quote.1.37%
IBOVESPA 0.00% 78571.2906 Delayed Quote.1.42%
KOSPI COMPOSITE INDEX 0.07% 2287.81 Real-time Quote.-7.10%
NASDAQ 100 -0.03% 7350.2269 Delayed Quote.14.94%
NASDAQ COMP. -0.07% 7820.1984 Delayed Quote.13.35%
NIKKEI 225 -0.29% 22697.88 Real-time Quote.0.00%
S&P 500 -0.09% 2801.83 Real-time Quote.4.89%
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