Tech Stocks Weigh on Markets

By Akane Otani and Georgi Kantchev Features Dow Jones Newswires

Technology stocks slid abruptly Thursday, pulling the S&P 500 away from record territory.

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The declines began around midday and accelerated, sending technology stocks sharply lower and weighing on major indexes. The moves marked a reversal from the morning, when technology stocks led gains in broader indexes.

In a week packed with earnings reports, some traders said the moves could have been due to investors unwinding bets on what has been one of the best-performing sectors in the stock market this year.

"You might have a little bit of profit-taking -- and maybe people trying to game tonight's earnings," said Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital, who added with tech stocks having had a strong run-up this year, they remain vulnerable to pullbacks.

The Nasdaq Composite, which is heavily influenced by tech giants including Facebook, Google and Microsoft, as well as biotechnology firms, slid 0.8%.

The Dow Jones Industrial Average rose 49 points, or 0.2%, to 21760, on track for a fresh closing record. The S&P 500 fell 0.3%.

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Corporate earnings reports have largely pointed to continued strength among U.S. firms. With second-quarter results in from nearly half of S&P 500 companies, the broader index is poised to report earnings growth of 9% from the year-earlier period, according to FactSet. That would build on gains from the first quarter, when U.S. companies reported their fastest earnings growth in nearly six years.

"Earnings are coming in above expectations, which is justifying the move up in equities," said Jeff Zipper, managing director at the Private Client Reserve of U.S. Bank. "At the same time, the weaker dollar is good for multinationals' bottom lines."

The S&P 500 tech sector fell 1%, with Advanced Micro Devices, Nvidia and Adobe Systems posting among the steepest declines.

The declines offset a rally in shares of Facebook, which said Wednesday afternoon that profit rose 71% in the second quarter. Facebook shares added 2.9%, paring gains after hitting a new high in market value earlier in the session.

Consumer-discretionary shares rose 0.6% in the S&P 500. Viacom jumped 3.2%, among the biggest gainers in the sector for the day, after The Wall Street Journal reported the firm was out of the running to acquire media company Scripps Networks Interactive.

Elsewhere, the Stoxx Europe 600 was down 0.1% after swinging on the latest batch of corporate earnings.

Shares of Royal Dutch Shell gained 0.7% after the company reported a sharp increase in cash flow from operating activities. Deutsche Bank shares fell 6.5% after the bank beat analysts' expectations in the second quarter but said revenue fell on the year.

Government bonds pulled back, with the yield on the 10-year U.S. Treasury note rising to 2.309%, according to Tradeweb, from 2.285% on Wednesday. Yields rise as bond prices fall.

Earlier, Japan's Nikkei Stock Average gained 0.2%. Hong Kong's Hang Seng Index rose 0.7% to its highest close since June 2015.

Write to Akane Otani at and Georgi Kantchev at

(END) Dow Jones Newswires

July 27, 2017 16:08 ET (20:08 GMT)