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Tech leads stocks lower on Wall Street, easing off records

UPDATED: Wed., July 28, 2021

A sign for Wall Street is shown in New York on Nov. 5, 2020. Drops in big technology companies led stocks broadly lower on Wall Street.  (Associated Press)
A sign for Wall Street is shown in New York on Nov. 5, 2020. Drops in big technology companies led stocks broadly lower on Wall Street. (Associated Press)
By Damian J. Troise Associated Press

A slide in technology and consumer-oriented companies Tuesday helped pull stocks lower on Wall Street, dragging the major indexes below the record highs they set a day earlier.

The S&P 500 fell 0.5%, snapping a five-day winning streak. The selling was most pronounced in technology and communication stocks, and in companies that rely on consumer spending.

Traders shifted money into sectors seen as less risky, including utilities, health care and in companies that make household and personal goods.

Investors also bought bonds, sending the yield on the 10-year Treasury note down to 1.23% from 1.27% late Monday. Long-term yields have eased off from their sharp rise earlier in the year, but Wall Street is still worried about inflation.

Markets have been choppy as investors try to get a clearer picture of how well the economy is recovering from the pandemic and how the Federal Reserve will eventually ease up on its support for the economy.

The central bank is meeting Tuesday and will release its latest statement on Wednesday.

“The market is trying to find firmer footing on what to expect going forward,” said Alan McKnight, chief investment officer at Regions Asset Management.

The S&P 500 index fell 20.84 points to 4,401.46. The Dow Jones Industrial Average dropped 85.79 points, or 0.2%, to 35,058.52. The tech-heavy Nasdaq lost 180.14 points, or 1.2%, to 14,660.58.Small company stocks also fell. The Russell 2000 index gave up 25.09 points, or 1.1%, to 2,191.83.

Part of the uncertainty hovering over markets has to do with COVID-19 and its potential impact on the recovery.

Case numbers and hospitalizations have been ticking higher in certain parts of the U.S. and world as the Delta variant spreads.

“The pace of growth is being questioned because of COVID-19 variants,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “There is some concern that the pace may not be as robust.”

Investors also were monitoring a regulatory clampdown by China on various companies.

Chinese stocks fell again Tuesday after Beijing announced enforcement measures on technology and real estate and was reported to be considering restrictions on for-profit education ventures.

Authorities say they need to protect public safety and financial stability, restrain surging housing costs and promote social welfare.

“In trying to understand the delta variant, what’s going on in China, is it a fundamental shift in the economic outlook, in the earnings outlook over the rest of the year and the beginning of the year?” McKnight said. “We don’t think that it is, but we acknowledge that it creates volatility, particularly when you’ve already had a large run this year.”

Technology companies and a mix of consumer-oriented companies were among the biggest losers Tuesday.

Wednesday’s report from the Fed could give investors more clues about the central bank’s level of concern about inflation and when it might start reducing its monthly bond purchases that have helped keep interest rates low.

Many companies that have reported quarterly results in recent weeks have cited he impact of inflation on their costs. On Tuesday, General Electric and Stanley Black & Decker mentioned higher costs.

“One of the big questions that the market is going to be answering over the next couple of months: Are (companies) able to actually implement price increases to cover the increase in costs?” McKnight said.

Investors considered a mixed bag of earnings from several large companies. UPS slumped 7% after its revenue for the latest quarter fell short of analysts’ forecasts.

Wall Street brushed off seemingly solid results from several other companies. Tesla fell 2% and industrial conglomerate 3M fell 0.6%, despite reporting solid financial results.

The Conference Board reported that consumer confidence edged higher in July, marking the sixth straight month that the measurement has risen.

The International Monetary Fund said it expects the global economy to expand 6% this year, a dramatic bounce-back from the 3.2% contraction in the pandemic year of 2020.

The broad declines in the U.S. followed more drops in China. Hong Kong’s Hang Seng lost 4.2% and the Shanghai Composite lost 2.5%.

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