Tech Stocks Resume Their Decline
October 15 2018 - 10:39AM
Dow Jones News
By Avantika Chilkoti
The S&P 500 edged lower Monday, resuming last week's slump
as shares of technology companies struggled.
The S&P 500 fell 0.2% soon after the opening bell, while the
Dow Jones Industrial Average added 32 points, or 0.1%, to 25376.
The tech-heavy Nasdaq Composite fell further, shedding 0.5% in
early trading.
Tech stocks -- from chip manufacturers to software makers --
broadly fell, as investors continued their flight from some of the
stock market's fastest-growing companies. Tech stocks in the
S&P 500 lost 1.1%, the most of the 11 major sectors in the
broad index, extending their decline so far this month to nearly
7%.
The losses were a continuation of last week's rout, where
several global equity indexes recorded their worst performances
since February as a steep spike in bond yields sparked a selloff in
stocks. Investors grew increasingly jittery over U.S. growth and
the prospect of further tightening from the Federal Reserve.
Though markets seemed to find their footing Friday, the downbeat
trading continued Monday.
"I'm starting to seriously worry that markets may trigger an
economic downturn earlier than widely expected, driving a
self-fulfilling market adjustment toward more normal (long-term)
valuations," said Erik F. Nielsen, group chief economist at
UniCredit Bank, in a note to clients. "There is little chance
global policy makers will come to the rescue in time."
The recent selloff is about the tech sector rather than the
broader U.S. economy, according to Daniel Morris, senior investment
strategist at BNP Paribas Asset Management. Amid concerns around
the Federal Reserve's plans to tighten monetary policy, markets
tanked last week as new U.S. inflation data came in softer than
expected.
"It's really not interest rates -- it's just because tech is so
far up that it was due," Mr. Morris said. "There is no real
fundamental reason in terms of the economy."
In Europe, the region's broad index--the Stoxx Europe 600--was
flat after negotiations around the U.K.'s impending departure from
the European Union suffered a fresh setback Sunday, with the two
sides failing to find a compromise on the issue of the Irish
border.
"A no-deal Brexit is likely to further curb growth expectations
and therefore the attractiveness of the U.K.," said Louise Dudley,
Global Equities Portfolio Manager, at Hermes Investment Management.
"Broadly our expectation is that we are likely to see higher costs
for businesses."
--Michael Wursthorn contributed to this article.
(END) Dow Jones Newswires
October 15, 2018 10:24 ET (14:24 GMT)
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