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US: Tech sputters again, dragging Wall Street lower
[NEW YORK] A recent slump in technology stocks worsened on Thursday, dragging on major US indexes, while investors fretted about the economy's health after the Federal Reserve lifted interest rates.
The S&P technology sector fell 0.5 per cent, continuing a slide that began last Friday. The sector cut steeper losses from earlier in the session, as did the benchmark S&P 500.
Apple shares ended down 0.6 per cent while Google parent Alphabet dropped 0.8 per cent after separate bearish analysts reports on the two tech heavyweights.
The consumer discretionary sector dropped 0.5 per cent, as Amazon.com shares closed down 1.3 per cent. Nike fell 3.2 per cent after the company said it would cut about 2 per cent of its global workforce and eliminate a quarter of its shoe styles.
Tech, still the best-performing group this year, and consumer discretionary have been among the sectors that have fueled the S&P 500's 8.6-per cent rally in 2017.
"You seem to be losing some momentum in the big growth names that have led the market so far this year," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina.
"At the same time, the economic data has just not been good enough to get investors excited about buying into other areas of the market."
The Dow Jones Industrial Average fell 14.66 points, or 0.07 per cent, to 21,359.9, the S&P 500 lost 5.46 points, or 0.22 per cent, to 2,432.46 and the Nasdaq Composite dropped 29.39 points, or 0.47 per cent, to 6,165.50.
Financials and energy, sectors that should thrive during economic expansions, also sold off. Financials slipped 0.4 per cent and energy fell 0.7 per cent.
Utilities and real estate, which are high-dividend paying groups known as "bond proxies", gained 0.6 per cent and 0.5 per cent, respectively, making them the best performing sectors along with the 0.6 per cent rise for industrials.
"If your best-performing sectors are real estate and utilities, it's a good sign that interest rates are dominating the equity market," said Brian Nick, chief investment strategist with TIAA Investments, an affiliate of Nuveen.
Long-dated US Treasury yields had tumbled to their lowest since early November on Wednesday after surprisingly weak data on inflation and retail sales overshadowed the Fed's interest rate hike.
Following that disappointing economic data, a report on Thursday showed the number of Americans filing for unemployment benefits fell more than expected last week, pointing to shrinking labor market slack that could allow the Fed to raise interest rates again this year despite moderate inflation growth.
"Monetary policy got hawkish," said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio.
"Fiscal policy is getting delayed and inflation will not cooperate the way the markets and the Fed want it to."
In other corporate news, Kroger shares tumbled 18.9 per cent after the supermarket chain slashed its full-year profit forecast.
About 6.5 billion shares changed hands in US exchanges, below the nearly 6.8 billion daily average over the last 20 sessions.
Declining issues outnumbered advancing ones on the NYSE by a 1.63-to-one ratio; on Nasdaq, a 1.78-to-one ratio favoured decliners.