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 becomes higher."

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 lost 5.5%.

"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 reopen.

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 shoulders."

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 shutdown.

"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 quarter.

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 0.1%.

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 Covid-19 pandemic.

Write to Caitlin Ostroff at and Julia Carpenter at


(END) Dow Jones Newswires

May 10, 2021 12:33 ET (16:33 GMT)

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