Tech Stocks Weigh on Markets

By Akane Otani and Georgi Kantchev Features Dow Jones Newswires

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

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The declines began around midday and accelerated, sending technology stocks sharply lower before they pared losses through the end of the session. 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. Amazon.com and Intel both reported after the bell, with Amazon shares falling in after-hours trading and Intel rising.

With tech stocks having had a strong run-up this year, the group remains vulnerable to pullbacks, Mr. Bajaj added.

The Nasdaq Composite, which is heavily influenced by tech giants including Facebook, Google and Microsoft, as well as biotechnology firms, fell 40.56 points, or 0.6%, to 6382.19 on Thursday.

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The S&P 500 fell 2.41 points, or 0.1%, to 2475.42, pulling back after closing at an all-time high Wednesday. Its tech sector shed 0.8% Thursday.

The Dow Jones Industrial Average rose 85.54 points, or 0.4%, to a new closing record of 21796.55. Boeing accounted for much of the blue-chip index's gain, as the aerospace giant continued to rally after reporting forecast-beating earnings Wednesday. Its shares rose 7.55, or 3.2%, to 241.00 Thursday, adding roughly 52 points to the Dow industrials.

Corporate earnings reports released over the past few weeks 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 about 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."

Declines in tech stocks including Advanced Micro Devices, Nvidia and Adobe Systems offset a rally in shares of Facebook, which said Wednesday afternoon that profit rose 71% in the second quarter. Facebook shares added $4.83, or 2.9%, to $170.44.

Telecommunications services shares jumped 5.2% in the S&P 500 and were the best-performing sector in the broad index on Thursday. Verizon jumped 3.41, or 7.7%, to 47.81, after reporting second-quarter revenue that beat analysts' expectations.

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

Japan's Nikkei Stock Average gained 0.1%. Hong Kong's Hang Seng Index rose 0.7% to its highest close since June 2015.

Write to Akane Otani at akane.otani@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

July 27, 2017 17:12 ET (21:12 GMT)