U.S. Stocks Slide as Tech Shares Drop

By Akane Otani and Jon Sindreu Features Dow Jones Newswires

Technology shares slid Thursday, dragging down major U.S. stock indexes.

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The Dow Jones Industrial Average fell roughly 150 points and the Nasdaq Composite declined 1.7%, putting the tech-heavy index on track for a third straight session with a swing of more than 1%.

It was the latest bout of weakness in tech shares, which have swung major indexes this month.

The Dow Jones Industrial Average fell 155 points, or 0.7%, to 21299, with Cisco Systems, Intel, Apple and Microsoft among the biggest decliners. The S&P 500 lost 0.8%, and the Nasdaq Composite fell 1.7%.

Many investors said they see few reasons to extend bets on stocks that are already trading near all-time highs. Recent economic data, especially inflation, have been middling, expectations for policy changes like tax cuts and fiscal stimulus have been tempered and second-quarter earnings season has yet to begin in earnest.

Central banks around the world have also suggested that they will push for a less accommodative monetary policy, sending yields on government bonds higher.

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"There's a lot of complacency out there," said Tom Stringfellow, president of Frost Investment Advisors. With stocks already trading near where many analysts expect them to finish the year, further pullbacks wouldn't be surprising, he added.

At the same time, selloffs have been relatively short-lived, suggesting investors don't want to miss out on a market that has been rising this year.

Technology shares fell 2.1% in the S&P 500 on Thursday, with Google parent Alphabet, Microsoft and chip maker Nvidia each losing more than 2%. The S&P 500 tech sector is up 16% this year, but has fallen nearly 3% in June as some investors questioned whether the group's run-up had been overdone.

Financial shares edged higher, benefiting from a recent rise in Treasury yields, as well as the Federal Reserve's decision Wednesday to allow big U.S. banks to ramp up dividend payouts and share buybacks.

The KBW Nasdaq Bank Index of U.S. commercial lenders added 1.6%.

The yield on the 10-year U.S. Treasury note rose to 2.270%, according to Tradeweb, from 2.223% Wednesday. Higher rates tend to boost banks' net-interest margins, a key measure of lending profitability.

Elsewhere, expectations of higher interest rates in Europe and the U.K. bolstered the euro and the pound, which were both up roughly 0.5% against the U.S. dollar.

The Stoxx Europe 600 fell 1.3%, with broad losses across sectors offsetting gains in bank shares.

A raft of statements Wednesday by policy makers at the European Central Bank, the Bank of England and the Bank of Canada has convinced many investors that the gradual end of monetary stimulus is coming.

The key test is whether economic data and corporate profits come in strong enough to justify borrowing costs going up, analysts said. While optimism from central bankers can give stocks a boost, higher rates can also make them look less attractive.

"What's surprising is that equities continue to take it so well," said Philippe Gijsels, chief strategy officer at BNP Paribas Fortis. "Markets have benefited enormously from the very loose monetary policy. It would be logical to assume that if this stops you'll have an impact on markets."

Earlier, Japan's Nikkei Stock Average edged up 0.4%, while Hong Kong's Hang Seng and Australia's S&P/ASX 200 added 1.1% each.

Write to Akane Otani at akane.otani@wsj.com and Jon Sindreu at jon.sindreu@wsj.com

(END) Dow Jones Newswires

June 29, 2017 15:20 ET (19:20 GMT)