Nasdaq Slips as Tech Sector Remains Under Pressure

By Riva Gold and Akane Otani Features Dow Jones Newswires

The Nasdaq Composite edged lower Tuesday, weighed down by declines in the shares of technology companies.

Continue Reading Below

Technology and biotechnology stocks have been some of the best performers in the S&P 500 this year, as investors have flocked to companies viewed as having high growth potential. But the group has slipped over the past month while financial stocks, a 2017 laggard, have regained ground.

The S&P 500 technology sector lost 0.7% Tuesday, while the Nasdaq Biotechnology Index edged down 1%. Shares of Google parent Alphabet fell 1.4% after the European Union's antitrust regulator fined Google EUR2.42 billion ($2.71 billion) for favoring its own comparison-shopping service in search results.

Meanwhile, financial stocks rose with government bond yields. The KBW Nasdaq Bank Index of U.S. commercial lenders rose 1.6%, while the yield on the 10-year U.S. Treasury note climbed to 2.203%, according to Tradeweb, from 2.135%. Higher rates tend to benefit banks, since they boost their net-interest margins: a key measure of lending profitability.

The Nasdaq fell 0.6% by early afternoon, on course to post losses for a second consecutive session. The Dow Jones Industrial Average was down 7.6 points, or less than 0.1%, to 21403, and the S&P 500 edged down 0.2%.

Elsewhere, European stocks were mostly lower, while a speech from European Central Bank President Mario Draghi lifted the euro and government bond yields.

Continue Reading Below

The euro climbed 1.1% to $1.1312 after Mr. Draghi expressed confidence that eurozone inflation would ultimately pick up as growth broadens and hinted that the bank might start winding down its large monetary stimulus.

The Stoxx Europe 600 dropped 0.8%, with technology shares among the biggest decliners.

Investors were otherwise largely focused on a series of speeches by global central bank officials on Tuesday, including remarks from Federal Reserve Chairwoman Janet Yellen.

"You can clearly see a disconnect between markets and central banks [on the strength of inflationary pressures]" said Florian Ielpo, head of macro strategy at Swiss fund manager Unigestion.

Ms. Yellen is set to speak later Tuesday in London on global economic issues as the Fed considers the timing of future interest-rate rises and the start of its plan to wind down its asset holdings. Investors want to know whether Ms. Yellen believes recent softness in some U.S. economic data is transitory.

During a slow news week as the second quarter comes to an end, "what matters most is Fedspeak," said Kathy Lien, head of forex strategy at BK Asset Management.

Elsewhere, Brazilian markets were relatively calm after the country's top prosecutor filed charges of corruption against President Michel Temer. Brazil's Bovespa Index edged up 0.3% and the real fell 0.6% against the dollar. Mr. Temer has previously denied any wrongdoing and has said he wouldn't step down from the presidency.

Korea's Kospi edged up 0.1% to another record close, while Japan's Nikkei added 0.4% following an earlier decline in the yen against the dollar.

Write to Riva Gold at riva.gold@wsj.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

June 27, 2017 13:22 ET (17:22 GMT)