Tech Stocks Tumble as Market Momentum Stalls

Falling U.S. government bond prices also weigh on investors

Technology stocks took another leg down Friday, dragging the tech-heavy Nasdaq Composite to its worst week since early spring. Investors sold many of the year’s best performing stocks, moving into so-called safety stocks such as utilities. The sentiment shift occurred as the stock market’s momentum appeared to stall in the face of suddenly higher long-term government bond yields. The Nasdaq Composite fell 91.06, or 1.2%, to 7788.45. For the week, the index is off 3%, its worst performance since the week ended March 23. Among big tech stocks, Apple slumped $3.70, or 1.6%, to $224.29 while Netflix fell 12.30, or 3.4%, to 351.35. The Dow Jones Industrial Average fell 180.43 points, or 0.7%, to 26447.05, while the S&P 500 dropped 16.04 points, or 0.6%, to 2885.57. “It doesn’t feel like the bottom yet,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus, adding that he expects to see a “sloppy” Monday for stocks, too. As Treasury yields have risen to multiyear highs, and as solid economic data puts the Federal Reserve on track for more short-term rate increases in coming months, the rising yields on bonds have some investors questioning the value of their stockholdings relative to the perceived safety of their bondholdings. The result has been two days in a row of big drops in the stock market. And while many analysts and traders said they expect stocks will end the year higher, they said they expect more swings similar to Thursday’s and Friday’s moves in the final three months of the year. “We’re going to be seeing more volatility,” said Tracie McMillion, head of Global Asset Allocation at Wells Fargo Investment Institute. “The market is trying to assess: How do you discount stock prices when interest rates are going up?” Shares of technology companies in the S&P 500, which have been the best performers in 2018 as investors chased growth, slumped 1.3%. “Tech is definitely pulling back this week, but given the backdrop of strong earnings, it’s just a pullback after a run-up earlier this year, not a reversal,” said Jeff James, portfolio manager at Driehaus Capital Management, who added that he had reduced his tech exposure recently. In other stock markets, the Stoxx Europe 600 declined 0.9%, putting its weekly losses at 1.8%. In Asia, Japan’s Nikkei Stock Average fell 0.8% and Hong Kong’s Hang Seng dropped 0.2%.