Technology shares tumbled Friday, as investors pulled back on one of the most profitable trades of the year so far.
Large tech companies pushed major indexes higher in recent months, with stalwarts such as Facebook, Apple and Amazon.com leading the rise. Those companies' outsized gains had prompted some uneasiness among investors in recent trading sessions, and a series of downbeat research notes about the group and climbing valuations sparked the Friday selloff, some traders and analysts said.
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Stock-trading volumes were elevated, making Friday the second-busiest trading day of 2017 as measured by number of shares changing hands on major U.S. exchanges.
"Tech stocks have done so well, have made such a big move, and people are asking 'how much better can it get for them?'" said Dan Morgan, senior portfolio manager at Synovus Trust Co. Mr. Morgan, whose firm owns many of the big tech names, said he isn't selling because he believes there hasn't been a change in the earnings potential for those companies.
The Nasdaq Composite fell 113.85, or 1.8%, to 6207.92. Technology companies in the S&P 500 dropped 2.7%, dragging the broader index into the red. The tech-heavy Nasdaq Composite's 15% year-to-date gain is roughly double the Dow Jones Industrial Average's rise, and the tech sector in the S&P 500 is up 19%.
Facebook, Google parent Alphabet, Amazon and Apple all fell more than 3%, and Microsoft dropped 2.3% on Friday -- though all five companies remain up by double digits for the year. Traders and analysts attributed the selloff in part to a research note by Goldman Sachs that called out the five companies' recent outperformance as potentially overheated.
Semiconductor companies, which make the chips that some of these larger tech companies use to build their products, also fell. The PHLX Semiconductor Index, which is up 20% in 2017 after gaining 37% in 2016, fell 4.2% Friday.
The Dow Jones Industrial Average spent much of the session higher on the day before dipping into negative territory in the afternoon and then rebounding to close at a record. The blue-chip index rose 89.44 points, or 0.4%, to 21271.97. The S&P 500 shed 2.02 points, or 0.1%, to 2431.77, posting a weekly decline of 0.3%.
U.S. markets were relatively calm through a series of events this week, including a European Central Bank meeting, the surprise result in the U.K. election and former FBI director James Comey's testimony.
The S&P 500 didn't post a daily move of more than 0.3% all week.
In the U.K. on Friday, stocks tied to the economy fell and the pound dropped after British voters deprived Prime Minister Theresa May and her ruling Conservative Party of a majority in Parliament.
Investors fear a hung parliament would usher in a fresh period of political uncertainty and make it more difficult for the U.K. to secure a favorable deal in its negotiations to exit from the European Union.
While this sort of event used to generate a more volatile trading environment globally, "the world seems pretty calm about it," said Adam Karrlsson-Willis, vice president of equity trading at INTL FCStone Financial.
"We have two years of question marks now," he said. "Everyone is sitting on their hands again to wait and see...nobody wants to make a distinct move either way."
Earlier, Japan's Nikkei Stock Average rose 0.5% as the dollar climbed against the yen, supporting exporters in the index. Shares of SoftBank jumped to 17-year highs following a surge in the U.S. in shares of Alibaba, in which it has a large stake.
Korea's Kospi ended at a record high, helped by a rise in shares of Samsung Electronics, which has the biggest weighting in the index.
Write to Corrie Driebusch at firstname.lastname@example.org and Riva Gold at email@example.com
(END) Dow Jones Newswires
June 09, 2017 17:01 ET (21:01 GMT)