Technology companies lead slight pullback in stocks
The wide sell-off sparks the biggest loss in four months.
A broad sell-off handed the U.S. stock market its biggest loss in more than four months Monday, pulling the major indexes below their recent record highs.
Technology stocks, the biggest gainers in 2017, accounted for much of the slide. Energy companies also fell as crude oil prices finished lower. Utilities and other rate-sensitive sectors declined as bond yields hit their highest level in almost four years.
Investors weighed the latest company earnings and deal news, including Keurig’s acquisition of Dr Pepper Snapple, and looked ahead to a busy week of corporate news and economic data.
The pullback followed a big rally Friday, which gave the stock market its biggest single-day gain since March 2017.
“It may just be we’ve had a really good run and people are taking profit off the table right now,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.
The Standard & Poor’s 500 index fell 19.34 points, or 0.7 percent, to 2,853.53. The Dow Jones industrial average slid 177.23 points, or 0.7 percent, to 26,439.48. The Nasdaq composite lost 39.27 points, or 0.5 percent, to 7,466.50. The Russell 2000 index of smaller-company stocks gave up 9.95 points, or 0.6 percent, to 1,598.11.
Falling stocks outnumbered rising ones almost 5-1 on the New York Stock Exchange.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.70 percent, the highest level in almost four years, from 2.66 percent late Friday.
The prospect for stronger economic growth, both in the U.S. and abroad, has helped drive bond yields higher. As bond yields rise, it puts pressure on yield-sensitive sectors: real estate investment trusts, telecoms and utilities. The three sectors finished more than 1 percent lower Monday and are in the red for the year.
Investors face a busy week of potential market-moving corporate news and economic data. Several big-name companies are due to report quarterly results Wednesday and Thursday, including Apple, Amazon, Microsoft, Facebook and Google’s parent company Alphabet.
“Combined, that’s 14.3 percent of the entire S&P 500 index in five companies — $3.6 trillion in market cap — so this is a very important week,” said Mike Baele, senior portfolio manager at U.S. Bank Private Wealth Management.
About a quarter of the companies in the S&P 500 have reported results so far this earnings season. About 65 percent of those delivered results that exceeded financial analysts’ expectations, according to S&P Global Market Intelligence.
On Monday, Lockheed Martin added 1.9 percent after the defense contractor reported better-than-expected quarterly results. The stock rose $6.52 to $351.42.
Apple fell 2.1 percent amid growing investor worries that the iPhone X has not been a hit with customers. Shares in the technology giant have been declining for several days, erasing billions of the company’s market capitalization. The stock shed $3.55 to $167.96. Apple is scheduled to report its earnings Thursday.
Beyond earnings, the market will be sizing up new data on U.S. jobs, manufacturing and consumer sentiment this week.
Trader John Panin works on the floor of the New York Stock Exchange on Monday. The major U.S. stock indexes were down slightly Monday, as losses in technology and energy companies outweighed gains elsewhere.