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U.S. stocks close sharply lower on extended selloff in tech sector

U.S. stocks close sharply lower on extended selloff in tech sector

WASHINGTON: U.S. stocks closed lower Thursday as investors continued to rotate out of battered technology names. A combination of geopolitical jitters and growing signs that global central banks are inching closer to unwinding policies that have helped to support both stocks and government bonds is also weighing on the broader market. A round of economic data, including readings on private-sector payrolls and weekly layoffs, did little to soothe worries about the expected muted pace of the Federal Reserve’s policy plans. The S&P 500 SPX, -0.94%  dropped 22.79 points, or 0.9%, to finish at 2,409.75 with all 11 sectors ending in negative territory. Telecoms and real-estate shares led the declines. The Nasdaq Composite Index COMP, -1.00%  fell 61.39 points, or 1%, to close at 6,089.46.

The general shift from tech to other stocks that began in early June is still in play, according to Mike Antonelli, equity sales trader at Robert W. Baird & Co.“The rotation out of tech is dominating stocks and is the overarching theme in the market,” he said. “People should not mistake rotation for volatility, and I am not terribly freaked out as investors are not selling everything equally.” Kent Engelke, chief economic strategist at Capitol Securities Management Inc., said the market’s moves are likely magnified by the selling pressure in technology stocks, given how widely they are held. “Technology has four times greater impact on the averages than oil because of technology’s massive percentage of the capitalization of the S&P,” he said. “The amount of monies required to keep the megasized technology growth issues at current levels is gargantuan.”

The Dow Jones Industrial Average DJIA, -0.74%  dropped 158.13 points, or 0.7%, to close at 21,320. General Electric Co. GE, -3.80% and Intel Corp. INTC, -2.07%   were down sharply. “There are a lot of things keeping risk appetite in check,” said Chris Beauchamp, senior market analyst at IG in London. “Geopolitical worries are beginning to bear down” on Wall Street and in Europe SXXP, -0.67% , where losses in regional benchmarks accelerated Thursday, he said.

Investors are also increasingly becoming skittish due to escalating tensions surrounding North Korea’s test launch this week of an intercontinental ballistic missile, sparking a “broader move out of equities back to bonds” as they sought assets considered havens, Beauchamp said. President Donald Trump said Thursday in Warsaw that he’s considering “some pretty severe things” in response to North Korea’s ongoing efforts to develop nuclear weapons that can reach the U.S. “The market is not getting too panicky just yet, but you’re into that July, August, September period where we could see a bit of a grind,” he added. Some analysts speculated that rising bond yields are hurting investor sentiment. “People are nervous about bond yields going up and you can see that in exaggerated moves in technology stocks and financials,” said Ian Winer, head of the equities division at Wedbush Securities.