Tech stocks weigh on Nasdaq
The S&P 500 and the Dow were slightly higher on Monday but gains were muted by a fall in technology stocks which nudged the Nasdaq lower as investors turned to more defensive sectors. The slow-growing, high-dividend S&P utilities and telecommunications were the best performers among the 11 S&P sectors.
THE S&P 500 and the Dow were slightly higher on Monday but gains were muted by a fall in technology stocks which nudged the Nasdaq lower as investors turned to more defensive sectors.
The slow- growing, highdividend S&P utilities and telecommunications were the best performers among the 11 S& P sectors.
Technology stocks, which have been under pressure as investors worry about stretched valuations, hit a session low in late afternoon trading.
“The bond market is signaling an economic slowing,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “That’s why you’re seeing defensive names like utilities do well, because equity investors are buying more in line with what that bond market is saying.”
The Dow Jones Industrial Average was up 14.79 points or 0.07% to 21,409.55, the S& P 500 gained 0.77 points or 0.03% to 2,439.07 and the Nasdaq Composite dropped 18.10 points or 0.29% to 6,247.15.
A fall in Microsoft, Amazon and Alphabet weighed most on the S&P as well as the Nasdaq.
“It’s simply profit taking going into the end of the quarter. I wouldn’t be surprised at all to see that reversed in early July with the thought that we’re going to see some strong earnings,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.
The utilities and the four-company telecommunications services sector index were the S&P’s best performers with gains of more than 0.80%.
The S& P energy was lower as investors worried about a relentless rise in US supply and a surge in demand for short sale contracts, or bets against higher crude prices.
The recent drop in oil prices has spurred concerns about low inflation, which remains below the Federal Reserve’s 2% target rate.
The Fed raised rates this month for the second time this year and has indicated it could raise them again but futures imply only a 50% chance of another rate hike by December.
The financial index rose by 0.60% after a string of Fed policy makers appeared to back another interest rate hike this year despite a patch of recent weak economic data.
San Francisco Fed President John Williams said the Fed needs to raise rates gradually or the economy runs the risk of overheating.
New York Fed chief William Dudley said recent narrowing of credit spreads, record stock prices and falling bond yields could encourage the Fed to continue tightening US policy.
Advancing issues outnumbered declining ones on the NYSE by 2.18-to-1; while on Nasdaq, a 1.33-to-1 ratio favored advancers. —