Tech Stocks Weigh on Markets
July 27 2017 - 2:20PM
Dow Jones News
By Akane Otani and Georgi Kantchev
Technology stocks slid abruptly Thursday, pulling major indexes
away from record territory.
The declines began around midday and accelerated, sending
technology stocks sharply lower and weighing on the Nasdaq
Composite. It was an abrupt reversal from the morning, when
technology stocks led gains in broader indexes.
The S&P 500 tech sector fell 1.5%, posting the steepest
declines of the broad index's 11 groups. The Nasdaq, which is
heavily influenced by tech giants including Facebook, Google and
Microsoft, as well as biotechnology firms, slid 1.2%.
In a week packed with earnings reports, some traders said the
moves could have been due to investors unwinding bets on what has
been one of the best-performing sectors in the stock market this
year.
"You might have a little bit of profit-taking -- and maybe
people trying to game tonight's earnings," said Mohit Bajaj,
director of ETF trading solutions at WallachBeth Capital, who noted
with tech stocks having had a strong run-up this year, they remain
vulnerable to pullbacks. Amazon.com and Intel are due to report
earnings after the market closes.
The Dow Jones Industrial Average fell 4 points, or less than
0.1%, to 21708. The S&P 500 fell 0.5%.
Corporate earnings reports have largely pointed to continued
strength among U.S. firms. With second-quarter results in from
nearly half of S&P 500 companies, the broader index is poised
to report earnings growth of 9% from the year-earlier period,
according to FactSet. That would build on gains from the first
quarter, when U.S. companies reported their fastest earnings growth
in nearly six years.
"Earnings are coming in above expectations, which is justifying
the move up in equities," said Jeff Zipper, managing director at
the Private Client Reserve of U.S. Bank. "At the same time, the
weaker dollar is good for multinationals' bottom lines."
Technology stocks fell 1.6% in the S&P 500, with Advanced
Micro Devices, Nvidia and Mastercard posting among the steepest
losses.
The declines offset a rally in shares of Facebook, which said
Wednesday afternoon that profit rose 71% in the second quarter.
Facebook shares added 1.9%, paring gains after hitting a new high
in market value earlier in the session.
Consumer-discretionary shares rose 0.1% in the S&P 500.
Viacom jumped 2.7%, among the biggest gainers in the sector for the
day, after The Wall Street Journal reported the firm was out of the
running to acquire media company Scripps Networks Interactive.
Elsewhere, the Stoxx Europe 600 was down 0.1% after swinging on
the latest batch of corporate earnings.
Shares of Royal Dutch Shell gained 0.7% after the company
reported a sharp increase in cash flow from operating activities.
Deutsche Bank shares fell 6.5% after the bank beat analysts'
expectations in the second quarter but said revenue fell on the
year.
Government bonds pulled back, with the yield on the 10-year U.S.
Treasury note rising to 2.309%, according to Tradeweb, from 2.285%
on Wednesday. Yields rise as bond prices fall.
Earlier, Japan's Nikkei Stock Average gained 0.2%. Hong Kong's
Hang Seng Index rose 0.7% to its highest close since June 2015.
Write to Akane Otani at akane.otani@wsj.com and Georgi Kantchev
at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
July 27, 2017 14:05 ET (18:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.