By Caitlin Ostroff and Julia Carpenter
Technology stocks tumbled Monday, weighing on major indexes,
after the S&P 500 and Dow Jones Industrial Average ended last
week at fresh records.
The S&P 500 ticked up less than 0.1% after closing Friday at
its 26th all-time high for this year. The Dow rose 0.8%, while the
Nasdaq Composite edged down 1.2%.
Stocks have ground higher in recent days after Federal Reserve
officials reiterated their commitment to easy financing conditions
to aid the economic recovery. President Biden is also proposing
additional fiscal spending. A weaker-than-expected jobs report on
Friday boosted optimism that the government and central bank are
likely to continue with supportive policies. But some money
managers are concerned that stocks' high valuations may mean the
rally will lose steam.
"Markets have come quite a long way and gone up a lot in a
relativity straight line," said Mike Bell, global market strategist
at J.P. Morgan Asset Management. "So the hurdle for further gains
Shares of semiconductor companies like Skyworks Solutions and
Qorvo were among Monday's decliners, falling 4.3% and 8.2%,
respectively. Micron Technology fell 5.4%, and Align Technology
"They are seen as bellwether names for global growth," Quincy
Krosby, chief market strategist at Prudential Financial, said of
semiconductor companies. "In other words, if you look at all the
areas they're in -- 5G, cybersecurity, cloud, gaming -- it's so
broad. I think this is again consolidation, pulling back, allowing
the market to just consolidate."
Tech stocks drove much of last year's market rally, a trend that
has reversed in 2021 as investors have piled into shares of value
and cyclical stocks that tend to fare better during an economic
recovery. Concerns that higher inflation may erode the value of
future earnings is likely to be driving investors away from
technology stocks as well, traders said.
Investors may be hesitant to put more money into technology
shares, which have become expensive, said Sebastien Galy, senior
macro strategist at Nordea Asset Management. Money managers are
increasingly betting on sectors such as banking, travel and leisure
that would benefit when the economy rebounds and more businesses
Climbing commodity prices, supply chain issues and chip
shortages are adding to producing costs, which are likely to feed
through to individual consumers and corporate profits, said Ipek
Ozkardeskaya, senior analyst at Swissquote Bank.
"From a market perspective, because everyone knows that
inflation is going higher, the real question is whether the rise in
inflation is going to be durable or not," Ms. Ozkardeskaya said.
"Inflation is a headwind for growth stocks. Value is going to be
more capable of carrying the weight of inflation on their
Prices of gasoline could continue to rise following the shutdown
of Colonial Pipeline's 5,500-mile pipeline from the Gulf Coast to
Linden, N.J. According to the AAA, gasoline prices could rise 3
cents to 7 cents a gallon this week in states most affected by the
"The immediate concern is: 'Are we going to have supply coming
up to the Northeast?'" Ms. Krosby said. "There's also a broader
concern -- and you'll see it in the market, too -- and that is,
'Who is responsible for this? Is this a couple hackers working in
an apartment somewhere in the world, or is this the work of a state
actor testing the U.S. and making it clear to everyone we do have
issues in terms of cybersecurity?'"
In other corporate news, Marriott International shares fell 2.9%
after the hotel chain said it swung to a loss for the first
In bond markets, the yield on the 10-year Treasury ticked down
to 1.575%, from 1.576% Friday.
Overseas, the pan-continental Stoxx Europe 600 edged up
The British pound rose 1.4% against the dollar. The Scottish
National Party fell one seat short of an outright majority in the
country's parliament, prompting optimism that Scotland may avoid
holding another vote on splitting away from the U.K.
"The market consensus is that if the SNP didn't get a majority,
then potentially the Scottish referendum became less of a threat,"
said Jane Foley, head of foreign-exchange strategy at Rabobank. But
the potential for the SNP to work with other parties to achieve a
vote on independence could cause sterling to be volatile in the
coming months, she added.
In Asia, South Korea's Kospi advanced 1.6%, and the Shanghai
Composite Index added 0.3%. Japan's Nikkei 225 rose by almost 0.6%.
Australia's S&P/ASX 200 closed 1.3% higher as mining stocks
pulled the index to its first record since the onset of the
Write to Caitlin Ostroff at firstname.lastname@example.org and Julia
Carpenter at Julia.Carpenter@wsj.com
(END) Dow Jones Newswires
May 10, 2021 12:33 ET (16:33 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.