Technology stocks fall sharply, leading U.S. indexes down
Technology stocks led a broad slide in U.S. stocks Tuesday after a day of mostly choppy trading.
Phone and utilities companies were among the big decliners after a sell-off in bonds sent yields sharply higher. Banks bucked the broader market decline amid heightened expectations of rising interest rates. Oil prices rose for the fourth straight day.
Developments in Washington helped put investors in a selling mood. Republican leaders in the Senate decided to delay a vote on a healthcare overhaul bill until after the Fourth of July recess.
“The delay of the healthcare vote added to a little bit of the uneasiness going into the quarter end here,” said Sean Lynch, co-head of global equity strategy at the Wells Fargo Investment Institute. “It’s just worries that some of this political noise can complicate the chance of possible tax reform, healthcare reform and other policy measures that could boost the economy.”
The Standard & Poor’s 500 index fell 19.69 points, or 0.8%, to 2,419.38. The Dow Jones industrial average declined 98.89 points, or 0.5%, to 21,310.66. The Nasdaq composite slid 100.53 points, or 1.6%, to 6,146.62. The Russell 2000 index of small-company stocks went down 13.10 points, or 0.9%, to 1,403.54.
Bond prices fell. The 10-year Treasury yield rose to 2.20% from Monday’s 2.13%.
The bond sell-off was triggered early Tuesday as investors reacted to remarks from European Central Bank President Mario Draghi, who expressed optimism over the future of the economy of the 19-country Eurozone. Although Draghi did not say the ECB was ready to rein in its stimulus measures, investors took his remarks as a hint that a change of policy could be coming in the next few months.
“The comments he made, that talked about deflation being nonexistent, were taken by the market pretty positively,” Lynch said. “The worries of that six months ago were penalizing stocks and penalizing financials.”
European stock markets closed lower as the euro surged after Draghi’s remarks.
Germany’s DAX slid 0.8%. France’s CAC 40 fell 0.7%. The FTSE 100 of leading British shares shed 0.2%.
The dollar rose to 112.15 yen from 111.89 yen. The euro rose to $1.1347 from $1.1181.
Investors also weighed new data on U.S. home prices and consumer confidence. The S&P’s CoreLogic Case-Shiller 20-city home price index shows home prices climbed 5.7% nationwide in April. The latest gain follows 5.9% increases in March and February. Separately, the Conference Board reported that its consumer confidence index rose to 118.9 this month from 117.6 in May.
Technology companies were among the biggest decliners Tuesday.
Computer memory maker Seagate Technology slid 6.8% to $39.51, and semiconductor manufacturer Advanced Micro Devices declined 4.8% to $13.40. Netflix also fell, losing $6.47, or 4.1%, to $151.03.
Alphabet, Google’s parent company, dropped 2.5% to $948.09 after the European Union slapped the online search giant with a $2.7-billion fine. The EU alleges that the company breached antitrust rules with its online shopping service. Alphabet said it is considering an appeal.
Investors also had their eye on company earnings and deal news.
Darden Restaurants climbed 2.9% to $92.69 after the owner of Olive Garden and other chain restaurants reported earnings that were better than analysts expected.
Sprint rose 2.1% to $8.18 after a published report suggested that the mobile phone company is in talks with Charter Communications and Comcast on a deal that could enable the cable operators to buy a stake in Sprint. Charter fell 0.8% to $329.87. Comcast fell 0.9% to $39.25.
J.C. Penney advanced 3.2% to $4.82 after an analyst upgraded the stock to hold from sell, saying the struggling retailer should be able to meet its sales target for the year.
Kohl’s rose 2.4% to $38.41 after the retailer announced that it appointed Bruce Besanko as chief financial officer. Besanko had held the same role at Supervalu.
Oil and gas futures notched gains. Benchmark U.S. crude gained 86 cents, or 2%, to settle at $44.24 a barrel in New York. Brent crude, the international standard, advanced 82 cents, or 1.8%, to $46.65 a barrel in London.
In other commodities trading, wholesale gasoline rose 2 cents to $1.46 a gallon. Heating oil rose 3 cents to $1.41 a gallon. Natural gas rose a penny to $3.04 per 1,000 cubic feet.
Gold inched up 50 cents to settle at $1,246.90 an ounce. Silver rose 2 cents to $16.59 an ounce. Copper rose 2 cents to $2.65 a pound.
UPDATES:
3:10 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 7 a.m.
