U.S. Stocks Slide as Tech Sector Remains Under Pressure

By Akane Otani and Riva Gold Features Dow Jones Newswires

A broad pullback in U.S. stocks sent the Dow Jones Industrial Average and the S&P 500 to their biggest daily declines in more than a month on Tuesday.

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Losses accelerated in afternoon trading, pulling 10 of the 11 sectors in the S&P 500 lower. Financial stocks jumped with government bond yields, while technology stocks -- one of the leaders in the stock market this year -- led declines on Tuesday.

It was the latest stumble for tech, which has rallied in 2017 as investors bet on companies they perceive to have relatively high growth potential. Tech shares have fallen 2.1% in the S&P 500 this month but are still up 17% so far this year.

Meanwhile, some traders said Senate Republicans' decision to delay a vote on their health-care overhaul was adding to concerns about the prospects for President Donald Trump's agenda. Expectations of tax cuts, fiscal stimulus and infrastructure spending helped stocks climb after the November presidential election.

"Investors want this signed so we can move on to tax reform," said R.J. Grant, director of equity trading at KBW Inc.

The Nasdaq Composite fell 100.52 points, or 1.6%, to 6146.62, posting its biggest one-day percentage drop since June 9 -- the start of the recent weakness in tech shares.

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The Dow Jones Industrial Average lost 98.89 points, or 0.5%, to 21310.66, with declines in Apple and Microsoft shaving roughly 23 points off the index. The S&P 500 dropped 19.69 points, or 0.8%, to 2419.38. It was the indexes' biggest one-day declines since May 17.

Shares of Google parent Alphabet fell $24, or 2.5%, to $948.09 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. Chip maker Nvidia dropped 5.57, or 3.7%, to 146.58 and Microsoft shed 1.32, or 1.9%, to 69.21.

"Google's had a nice run, and I think there are people taking off some exposure from the space prior to the month-end," said Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital.

Rising government bond yields rippled through the stock market, after European Central Bank President Mario 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.

Utilities shares, which are often thought of as bond proxies because they pay relatively high dividends, fell 1.3% in the S&P 500 as U.S. government bonds weakened.

Meanwhile, financial stocks in the index rose 0.5%. Higher rates tend to boost net-interest margins, a key measure of lending profitability.

Earlier, European government bond yields and the euro rose after Mr. Draghi's speech. Some investors and analysts have expressed concern about central banks tightening policy while inflation data remains soft.

"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.

The euro climbed 1.4% to $1.1340. The Stoxx Europe 600 dropped 0.8%, with technology and utilities shares among the biggest decliners.

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

(END) Dow Jones Newswires

June 27, 2017 18:00 ET (22:00 GMT)