Shares of technology companies fell around the world Monday, building on Friday’s steep declines in the U.S. giants that had been driving this year’s stock market gains.
The tech-heavy Nasdaq Composite fell 1.3%. The S&P 500 lost 0.4%, dragged lower by a 2.3% fall in tech shares. The Dow Jones Industrial Average fell 74 points, or 0.4%, to 21199.
Apple shares lost 3.8%. Amazon.com, Alphabet and Facebook all lost more than 2%. Shares of those companies each fell 3% or more Friday. Concerns that such a highly concentrated group of companies were leading the market higher had worried some investors, with S&P 500 tech shares—which account for roughly 23% of the index—up nearly 19% so far this year and the Nasdaq Composite up 15%
The Stoxx Europe 600 dropped 1.1%, held back by a 4.5% drop in the tech sector, which was poised for its worst decline in nearly a year. Shares of semiconductor manufacturer AMS, 3-D sensors maker STMicroelectronics and the U.K.’s Dialog Semiconductor fell 12.2%, 9.8% and 7.5%, respectively. Europe’s technology sector had also gained 16% so far this year, echoing the rally in its U.S. peers.
Despite the day’s declines, “This era we’re in now of resilient but slow growth and low inflation is one that would favor tech,” said David Stubbs, global market strategist at J.P. Morgan Asset Management. The sector should still be able to perform well despite higher valuations assuming it continues to innovate and the financial environment continues to favor large companies with growth potential, he said.
For the second quarter, the information technology sector is expected to report the second highest year-over-year earnings growth in the S&P 500 at 9.3%, according to FactSet.
Earlier, declines in tech shares also hit stock markets in Asia. Leading the way lower was Hong Kong’s Hang Seng Index, which slid 1.2% amid declines in internet heavyweight Tencent, which had recently climbed to record highs.
SOURCE: Riva Gold
The Wall Street Journal