Selloff In Tech Shares Deepens, Drags Down US Stock Market

By EFE Ingles

United States stocks fell Monday as a rout in the technology sector deepened, dragging everything from chipmakers to social media firms to software developers lower, according to a report by Dow Jones Newswires supplied to EFE.

The Dow Jones Industrial Average fell 168 points, or 0.6 percent , to 26276. The S&P 500 lost 0.7 percent and the Nasdaq Composite slipped 1.5 percent, heading toward its third straight loss.

Monday’s declines extended a period of weakness for US stocks, which slumped last week as a bond selloff sent Treasury yields to multiyear highs.

The recent run in bond yields has made some wary that the market could be headed toward a rotation where investors are encouraged to pull back from riskier assets as holding risk-free ones become more attractive.

Adding to those worries, technology stocks – a major driver of the bull market in the last few years – have shown signs of faltering. Facebook, Apple,, Netflix and Alphabet each lost more than 1 percent apiece Monday.

As traders geared up for more swings ahead, the Cboe Volatility Index soared 18 percent.

Many investors believe stocks still have room to run, thanks to strong economic data and buoyant confidence among businesses and consumers, Dow Jones added in its report to EFE.

Yet they are also cognizant that, as interest rates continue rising, investors will increasingly question how much risk they are willing to take on in their portfolios.

“The overall economy is going well and the bond market is reflecting it,” said Terry Sandven, a strategist at US Bank Wealth Management. “That, though, also means more pressure for stocks.”

As technology stocks came under pressure, so-called bond proxies – groups that tend to pay hefty dividends and perform well during volatile periods – were among the best performers in the S&P 500.

The S&P 500 consumer staples sector rose 1.2 percent, with Conagra Brands and Coty adding more than 2 percent apiece, while the real estate sector jumped 1.6 percent.

The US bond market was closed for a holiday Monday.

Energy shares followed US crude oil prices lower. Marathon Petroleum lost 2.6 percent and Baker Hughes fell 0.9 percent.

Elsewhere, European stocks tumbled as investors contended with fresh worries about Italy’s budget.

The European Commission on Friday said Italy’s budget plans are a “significant deviation” from the recommended fiscal policies and a “source of serious concern,” raising the prospect of a clash between Rome and Brussels.

The Stoxx Europe 600 fell 1.1 percent, while Italy’s FTSE MIB shed 2.4 percent .

In China, stocks suffered their worst day in more than three months, dragging the rest of Asian markets down.

The benchmark Shanghai Composite Index lost 3.7 percent as traders and investors returned after a weeklong national holiday.

The declines came after China’s central bank moved to free up nearly $175 billion to get commercial banks to boost their lending and pay off short-term borrowings, the latest effort by Beijing to lift growth in a slowing economy as its trade fight with the US escalates.

“This move should be helpful but not enough to the slowing economy,” analysts at Société Générale said in a note to clients.

Elsewhere in Asia, Hong Kong’s Hang Seng was down 1.4 percent, while South Korea’s Kospi fell 0.6 percent.

Later this week, investors will be looking at the start of the third-quarter earnings season. Big US banks including JPMorgan, Wells Fargo and Citi are reporting results later in the week.

This article provided by NewsEdge.