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Tech stocks tumble, taking down Nasdaq as big names sink
June 9, 2017 / 11:33 AM / 3 months ago

Tech stocks tumble, taking down Nasdaq as big names sink

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 2, 2017. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Technology stocks sold off sharply on Friday, taking a toll on the Nasdaq and dragging on other major Wall Street indexes, which touched record highs earlier in the day.

The technology sector .SPLRCT, which soared this year and led the market’s rally, finished down 2.7 percent, after paring declines.

But financials .SPSY and energy .SPNY, which have lagged the broader rally this year, were strong. Energy gained 2.5 percent and financials rose 1.9 percent.

“It is a rotation today and it is out of tech into some of the other sectors,” said Mark Kepner, managing director of sales and trading at Themis Trading in Chatham, New Jersey.

The Nasdaq Composite .IXIC dropped 113.85 points, or 1.8 percent, to end at 6,207.92.

The Dow Jones Industrial Average .DJI rose 89.44 points, or 0.42 percent, to 21,271.97, while the S&P 500 .SPX lost 2.02 points, or 0.08 percent, to 2,431.77.

Apple Inc (AAPL.O) shares fell 3.9 percent in their biggest daily percentage decline since April 2016 and were the biggest weight on the three major indexes, after a report that iPhones to be launched later this year will use modem chips with slower download speeds than some rival smartphones.

Facebook Inc (FB.O) fell 3.3 percent, its biggest decline since November 2016, and Alphabet (GOOGL.O) ended down 3.4 percent, its worst day since June 2016. Microsoft Corp (MSFT.O) fell 2.3 percent. chipmaker Nvidia (NVDA.O) closed down 6.5 percent at $149.60 after Citron Research said the stock could trade back to $130.

Kepner said the combination of the comments on Nvidia and a cautious Goldman Sachs report about tech stocks was leading to a “little air coming out of the balloon.”

Shares of software company Cloudera (CLDR.N) also tumbled, shedding 15.6 percent after its quarterly results.

“Tech has been on a tear for a very, very long ... time,” said John Praveen, managing director for Prudential International Investments Advisers in Newark, New Jersey, adding that investors may be using the Cloudera quarterly results as “an excuse to take some profits.”

Investors were also digesting major political and economic events this week in the United States and Europe.

U.S. stocks had started Friday’s session strong after the results of the UK election, in which British Prime Minister Theresa May’s Conservative Party lost its parliamentary majority.

Investors also viewed former FBI Director James Comey’s testimony on Thursday as not disruptive to the stock market.

Market watchers had been concerned that the result of the Congressional hearing could derail President Donald Trump’s plans for lower taxes, fiscal spending and looser regulations, which have helped drive the S&P 500 up 13.7 percent since his election.

Focus was turning to the Federal Reserve’s policy meeting next week, when the U.S. central bank is overwhelmingly expected to raise interest rates.

“Markets are probably expecting that the Fed will raise rates, but they will be very gradual in removing monetary accommodation,” Praveen said.

Advancing issues outnumbered declining ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored advancers.

About 8.7 billion shares changed hands on U.S. exchanges, well above the 6.7 billion daily average over the last 20 sessions.

Additional reporting by Chuck Mikolajczak in New York and Tanya Agrawal and Yashaswini Swamynathan in Bengaluru; Editing by James Dalgleish and Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.
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