Technology companies fall sharply, leading US indexes lower
By Alex Veiga
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.
Late-afternoon developments in Washington helped put investors in a selling mood.
Republican leaders in the Senate decided to delay a vote on a health care overhaul bill until after the July 4 recess.
“The delay of the health care 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, health care reform and other policy measures that could boost the economy.”
The Standard & Poor’s 500 index fell 19.69 points, or 0.8 percent, to 2,419.38. The Dow Jones industrial average slid 98.89 points, or 0.5 percent, to 21,310.66. The Nasdaq composite lost 100.53 points, or 1.6 percent, to 6,146.62. The Russell 2000 of small-company stocks gave up 13.10 points, or 0.9 percent, to 1,403.54.
Bond prices fell. The 10-year Treasury yield rose to 2.20 percent from 2.13 percent late Monday.
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. And while Draghi did not say the ECB was ready to rein back 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,” said Lynch. “The worries of that six months ago were penalizing stocks and penalizing financials.”
European stock markets closed lower as the euro surged following Draghi’s remarks.
Germany’s DAX fell 0.8 percent, while France’s CAC 40 slid 0.7 percent. The FTSE 100 of leading British shares shed 0.2 percent.
The dollar rose to 112.15 yen from 111.89 yen late Monday. The euro strengthened 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 percent nationwide in April. The latest gain follows price increases of 5.9 percent 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 gave up $2.88, or 6.8 percent, to $39.51, while semiconductor manufacturer Advanced Micro Devices slid 68 cents, or 4.8 percent, to $13.40. Netflix also fell, losing $6.47, or 4.1 percent, to $151.03.
lphabet, Google’s parent company, slid 2.5 percent 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. Alphabet shares fell $24 to $948.09.
Investors also had their eye on the latest company earnings and deal news.
Darden Restaurants rose 2.9 percent after the owner of Olive Garden and other chain restaurants reported earnings that were better than analysts expected. The stock added $2.61 to $92.69.
Sprint gained 2.1 percent following a published report suggesting the mobile phone company is in talks with Charter Communications and Comcast Corp. on a deal that could enable the cable operators to buy a stake in Sprint. Sprint picked up 17 cents to $8.18. Comcast slid 34 cents, or about 1 percent, to $39.25, while Charter lost $2.78, or 0.8 percent, to $329.87.
J.C. Penney added 3.2 percent 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. Penney shares rose 15 cents to $4.82.
Shares in Kohl’s gained 2.4 percent after the retailer announced it has appointed Bruce Besanko as chief financial officer. Besanko had held the same role at Supervalu. Kohl’s added 89 cents to $38.41.
Oil and gas futures notched gains Tuesday.
Benchmark U.S. crude gained 86 cents, or 2 percent, to settle at $44.24 per barrel in New York. Brent, the international standard, added 82 cents, or 1.8 percent, to close at $46.65 per barrel in London.
In other commodities trading, wholesale gasoline rose 2 cents to $1.46 per gallon. Heating oil also added 3 cents to $1.41 per gallon. Natural gas gained a penny to $3.04 per 1,000 cubic feet.
Gold inched up 50 cents to settle at $1,246.90 ounce. Silver added 2 cents to $16.59 per ounce. Copper gained 2 cents to $2.65 per pound.