Weakness in technology shares hurt the S&P 500 for the third straight session Thursday, with worries about regulation and trade continuing to hang over the market’s best-performing sector.
A day after internet shares led the group lower, semiconductor stocks were the laggard. Micron Technology shares slumped after Baird analysts lowered their price target on the stock, and KLA-Tencor , Lam Research and Applied Materials were also among the S&P 500’s worst performers, with each of the four companies dropping at least 5%. Investors weighed mixed comments about industry pricing from executives at a Citigroup technology conference.
Trade developments have buffeted chip makers throughout the year because of their reliance on global commerce, particularly through China. While their shares recovered last month, some analysts expect swings to continue as trade discussions roll on.
More broadly, some investors predict the volatility that has engulfed stocks around the world will spread to the U.S. if the trade dispute with China intensifies.
The possibility of additional tariffs “doesn’t seem particularly priced into U.S. markets,” said Clark Fenton, managing partner and chief investment officer at Agilis Investment Management.
Investors are waiting to see if the Trump administration will move ahead with tariffs on an additional $200 billion of Chinese goods.
The tech-heavy Nasdaq Composite fell 0.9%, while the S&P 500 shed 0.4%. The Dow Jones Industrial Average inched up 21 points, or less than 0.1%, to 25996. Major indexes had fallen in three of the previous four sessions entering Thursday, though they remain near record levels.
Declines in internet stocks also continued Thursday, after Facebook and Twitter executives testified before Congress a day earlier about election interference on their platforms. Twitter dropped 5.9%, while Facebook was down 1.8% and Google parent Alphabet fell 1.3%. Amazon.com dropped 1.8%.
Despite recent volatility, some analysts expect consistent revenue growth to keep technology stocks as the market’s leader. Dell Technologies boosted its full-year sales guidance after reporting a nearly 20% increase in total net revenue for the most recent quarter. Shares were up 0.2%.
Moves in most other sectors were muted, with analysts looking ahead to Friday’s jobs report for the latest reading on the U.S. economy.
Data on Thursday showed the number of Americans filing applications for new unemployment benefits fell at the end of August to a nearly five-decade low, while U.S. worker productivity rose this spring at the best pace in more than three years.
Consistent U.S. economic figures have supported major indexes this year in the face of continuing trade disputes with China and Canada. At the same time, investors have said growth hasn’t accelerated so quickly that the Federal Reserve will have to quicken its pace of interest-rate increases, keeping the backdrop favorable for U.S. stocks.
While assets more tied to global growth including commodities and emerging markets have wobbled, some analysts expect the U.S. to remain a favored region.
“In the short term, [trade is] not necessarily a huge story for the U.S.,” said Jonas Goltermann, an economist at ING. “It’s much worse for the Chinese.”
The yield on the 10-year U.S. Treasury note fell to 2.877% from 2.902%. Yields fall as bond prices rise, and the drop Thursday dragged down shares of financial firms because higher yields tend to lift lending profitability.
The dollar weakened for the second straight session, boosting beaten-down commodities by making them cheaper for overseas buyers. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, dropped 0.2%.
Elsewhere, the Stoxx Europe 600 dropped 0.6% and closed at a fresh five-month low.
Stocks in Asia continued to fall, with Hong Kong’s Hang Seng shedding 1% and the Shanghai Composite down 0.5%. Japan’s Nikkei Stock Average declined for the fifth straight session, closing down 0.4%.
Write to Amrith Ramkumar at [email protected]