Sun, Jun 11, 2017 - Page 14 News List

Tech stocks weigh down Wall Street

‘ROTATION’:Investors might have used a worse-than-expected quarterly result by Cloudera to take some profits, Prudential managing director John Praveen said

Reuters, NEW YORK

Traders work on the floor of the New York Stock Exchange on Friday.

Photo: Bloomberg

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 2.7 percent, after paring declines.

However, financials and energy, which have lagged the broader rally this year, were strong. Energy gained 2.5 percent and financials rose 1.9 percent.

“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 1.8 percent, to end at 6,207.92. The Dow Jones Industrial Average rose 89.44 points, or 0.42 percent, to 21,271.97, and the S&P 500 lost 2.02 points, or 0.08 percent, to 2,431.77.

For the week, the NASDAQ fell 1.6 percent from 6,305.80 points, the Dow rose 0.3 percent from 21,206.29 and the S&P fell 0.3 percent from 2,439.07.

Apple Inc shares on Friday fell 3.9 percent in their biggest daily percentage decline since April last year 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 3.3 percent, its biggest decline since November last year, and Alphabet Inc ended down 3.4 percent, its worst day since June last year. Microsoft Corp fell 2.3 percent.

Chipmaker Nvidia Corp closed down 6.5 percent at US$149.60 after Citron Research said the stock could trade back to US$130.

Kepner said the combination of the comments on Nvidia and a cautious Goldman Sachs Group Inc report about tech stocks was leading to a “little air coming out of the balloon.”

Shares of software company Cloudera Inc also tumbled, shedding 15.6 percent 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 might 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 US 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 FBI 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 US President Donald Trump’s plans for lower taxes, fiscal spending and looser regulations, which have helped drive the S&P 500 up 13.7 percent since his election in November last year.

Focus was turning to the US Federal Reserve’s policy meeting next 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 New York Stock Exchange by a 1.68-to-1 ratio; on NASDAQ, a 1.03-to-1 ratio favored advancers.

About 8.7 billion shares changed hands on US exchanges on Friday, well above the 6.7 billion daily average over the past 20 sessions.

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