Tech sell-off drags stocks, pulling market below highs

A sell-off in technology companies dragged stocks lower on Wall Street Monday, pulling the major indexes back from their recent all-time highs.

The S&P 500 fell 1% after wobbling between small gains and losses the first half of the day. The decline broke a threeday winning streak for the benchmark index, which set a record high on Friday.

Big Tech companies, including Apple, Facebook, Amazon and Google’s parent company, accounted for most of the index’s decline. Communication stocks and companies that rely on consumer spending also helped pull the market lower, outweighing gains in household goods makers, utilities and other sectors.

The wave of selling handed the Nasdaq its worst day in more than seven weeks, as the index is heavily weighted with big technology stocks. The tech sector, which led the market’s stunning comeback in 2020, now lags the other 10 sectors in the S&P 500 so far this year with a gain of 3.9%.

“You’ve had a tremendous run and there’s a lot of tech-focused stuff that’s up 70% to 100% in the last 12 months,” said Andrew Mies, chief investment officer at investment advisory firm 6 Meridien. “The fact that some people are taking chips off the table is not surprising.”

The S&P 500 index, which notched a weekly gain in eight of the last 10 weeks, fell 44.17 points to 4,188.43. The Dow Jones Industrial Average dropped 34.94 points, or 0.1%, to 34,742.82. The blue chip index, which hit an all-time high on Friday for the third straight day, had traded higher for much of Monday, but dipped into the red in the last half-hour of trading.

The Nasdaq lost 350.38 points, or 2.5%, to 13,401.86. The index is up just under 4% so far this year, lagging well behind the S&P 500’s 11.5% gain.

Small company stocks also had a rough day. The Russell 2000 index fell 58.93 points, or 2.6%, to 2,212.70.

Wall Street has been mostly rising in recent weeks amid expectations of an economic recovery and strong profits this year. Massive support from the U.S. government and the Federal Reserve, and increasingly positive economic data, have also encouraged investors to push stock prices to all-time highs, despite an undercurrent of worry about inflation and the potential for higher interest rates later this year.

The government’s latest U.S. jobs report Friday showed employers added just 266,000 jobs in April, far fewer than the 975,000 economists were expecting. It was a steep drop from March’s hiring pace of 770,000. The weak jobs number suggests the economy is still in recovery mode and bolsters the case for the Federal Reserve to keep interest rates low.

But keeping interest rates low means the potential for more inflation down the road. Commodity prices spiked in early trading before settling down. Copper rose 5% in the early going before reversing to a loss of 0.7%. Platinum, which has several industrial uses, rose 0.1%. Investors will get some key inflation data this week, especially on Wednesday when April’s consumer price index is released. Inflation has been a concern for investors since bond yields spiked earlier this year, but yields have mostly stabilized since then.