Nasdaq Slides as Tech Sector Remains Under Pressure

By Akane Otani and Riva GoldFeaturesDow Jones Newswires

U.S. stocks retreated Tuesday, weighed down by declines in the shares of technology companies.

Stocks' losses accelerated in afternoon trading, pulling nine 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 -- were among the worst-performing sectors in the broad index.

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The day's moves marked another retreat for the technology sector, which has rallied in 2017 as investors bet on companies viewed as having high growth potential. Recent losses have pulled the sector down 1.7% in the S&P 500 for the month.

Some traders said the delay of a vote on Senate Republicans' 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 1.1%, on course for its biggest one-day drop since June 9 -- the start of the recent weakness in tech shares. The Dow Jones Industrial Average slipped 38 points, or 0.2%, to 21371, and the S&P 500 dropped 0.4%.

Shares of Google parent Alphabet fell about 2% Tuesday 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 2.3%, and Microsoft shed 1.2%.

"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% in the S&P 500 as U.S. government bonds weakened.

Meanwhile, financial stocks in the index rose 0.9%. Higher rates tend to boost net-interest margins, a key measure of lending profitability.

The yield on the 10-year U.S. Treasury note climbed to 2.202%, according to Tradeweb, from 2.135% Monday. Yields rise as bond prices fall.

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 $1.1339. The Stoxx Europe 600 dropped 0.8%, with technology and utilities shares among the biggest decliners.

Brazil's Bovespa Index shed 0.6% and the real fell 1% against the dollar after the country's top prosecutor filed charges of corruption against President Michel Temer. 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 Akane Otani at and Riva Gold at

(END) Dow Jones Newswires

June 27, 2017 15:20 ET (19:20 GMT)