Tech stocks tumble, taking down Nasdaq

NEW YORK - 10 June 2017: Technology stocks sold off sharply on Friday, wounding the Nasdaq and holding down other major Wall Street indexes, which had touched record highs earlier in the session.

The technology sector, which had soared this year and led the market's rally, dropped 2.7 percent, pulling back from steeper declines in the session.

Countering those losses was strength in financials and energy, two groups that have lagged the broader rally this year. Energy gained 2.5 percent and financials rose 1.9 percent.

"It is a rotation today and it is out of tech into some of the other sectors," said Mark Kepner, managing director of sales and trading at Themis Trading in Chatham, New Jersey.

The Nasdaq Composite dropped 113.85 points, or 1.8 percent, to end at 6,207.92.

The Dow Jones Industrial Average rose 89.44 points, or 0.42 percent, to 21,271.97, while the S&P 500 lost 2.02 points, or 0.08 percent, to 2,431.77.

Apple shares fell 3.9 percent and were the biggest weight on the three major indexes, after a report that upcoming iPhones launched will use modem chips with slower download speeds than some rival smartphones.

Facebook and Alphabet ended down more than 3 percent, Microsoft fell 2.3 percent, while chipmaker Nvidia closed down 6.5 percent at $149.60 after Citron Research said the stock could trade back to $130.

Kepner said the combination of the comments on Nvidia and a cautious Goldman Sachs report about tech stocks was leading to a "little air coming out of the balloon."

Shares of software company Cloudera also tumbled 15.6 percent after its earnings report.

"Tech has been on a tear for a very, very long ... time," said John Praveen, managing director for Prudential International Investments Advisers in Newark, New Jersey, adding that investors may be using the earnings report as "an excuse to take some profits."

Investors were also digesting major political and economic events this week in the United States and Europe.

U.S. stocks had started the session strong after the results of the UK election, where British Prime Minister Theresa May's Conservative Party lost its parliamentary majority.

Investors also viewed former FBI Director James Comey's testimony on Thursday as not disruptive to the stock market.

Market watchers were concerned the result of the Congressional hearing could have derailed President Donald Trump's plans for lower taxes, fiscal spending and looser regulations, which have helped drive the S&P 500 up 13.7 percent since his election.

Focus was turning to the Federal Reserve's meeting next week, when the U.S. central bank is overwhelmingly expected to raise interest rates.

"Markets are probably expecting that the Fed will raise rates, but they will be very gradual in removing monetary accommodation," Praveen said.

Advancing issues outnumbered declining ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored advancers.

About 8.7 billion shares changed hands in U.S. exchanges, well above the 6.7 billion daily average over the last 20 sessions.