Tech stocks take down Nasdaq
NEW YORK — Technology stocks sold off sharply on Friday, taking a toll on the Nasdaq and dragging on other major Wall Street indices, which touched record highs earlier in the day.
The technology sector, which soared this year and led the market’s rally, finished down 2.70%, after paring declines.
But financials and energy, which have lagged the broader rally this year, were strong. Energy gained 2.50% and financials rose 1.90%.
“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 dropped 113.85 points, or 1.80%, to end at 6,207.92. The Dow Jones Industrial Average rose 89.44 points, or 0.42%, to 21,271.97, while the S&P 500 lost 2.02 points, or 0.08%, to 2,431.77.
Apple, Inc. shares fell 3.90% in their biggest daily percentage decline since April 2016 and were the biggest weight on the three major indices, 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. fell 3.30%, its biggest decline since November 2016 and Alphabet ended down 3.40%, its worst day since June 2016. Microsoft Corp. fell 2.30%. Chipmaker Nvidia closed down 6.50% at $149.60 after Citron Research said the stock could trade back to $130.
Mr. 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 also tumbled, shedding 15.60% 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. US 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 Federal Bureau of Investigation 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 J. Trump’s plans for lower taxes, fiscal spending and looser regulations, which have helped drive the S& P 500 up 13.70% since his election.
Focus was turning to the Federal Reserve’s policy meeting this week, when the US 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 8.70 billion shares changed hands on US exchanges, well above the 6.70 billion daily average over the last 20 sessions.