NEW YORK: A selloff in the technology sector deepened Friday, but the Dow Jones Industrial Average and the S&P 500 hung on to post monthly gains in April.
The tech-driven declines sent stocks to their worst weekly loss since February, leading some analysts and traders to question whether the trajectory of the overall market could be shifting after a 2½-month rally.
On the one hand, the price of U.S.-traded oil has climbed above $45 for the first time since November, buoying shares of energy companies. On the other, the tech sector, which has the largest sector weighting in the S&P 500, posted its second consecutive week of sharp losses.
A string of disappointing quarterly results from high-profile tech companies, including Microsoft and Apple, has led to persistent selling in the group in recent sessions, making it the worst-performing sector for the year to date.
As recently as April 20, the S&P 500 was up 2.1% for the month and the Nasdaq Composite was up 1.6%. Following the tech selloff, the S&P 500 ended up 0.3% for the month, while the Nasdaq fell 1.9%. The Dow gained 0.5% in April.
“Tech is such a vibrant area everyone looks to,” said Dan Morgan, senior portfolio manager at Synovus Trust Co., whose fund owns shares of multiple technology companies, including Apple. “The fact that earnings weren’t as good as everyone hoped, I wonder if that changes the sentiment in the market.”
He said he was pleased that the week ended with encouraging earnings from Facebook and Amazon.com. However, he said he isn’t sure if it will be enough to stem the bleeding.
“Tech was a tough cycle this quarter,” Mr. Morgan said. “We started off this week getting a bloody nose with Apple and Twitter , and last week was a tough slide.”
On Friday, the Dow Jones Industrial Average fell 57.12 points, or 0.3%, to 17773.64. The tech-heavy Nasdaq Composite lost 29.93 points, or 0.6%, to 4775.36. The S&P 500 declined 10.51 points, or 0.5%, to 2065.30. Friday’s decline left the tech sector with a weekly loss of 3.6% after falling 2% the week before.
Both the S&P 500 and the Dow industrials lost 1.3% this past week, their biggest losses since the week ended Feb. 5 and Feb. 12, respectively.
Shares of Gilead Sciences declined after the company said revenue from its hepatitis C drugs fell in the first quarter. Above, the company’s headquarters in Foster City, Calif. ENLARGE
Shares of Gilead Sciences declined after the company said revenue from its hepatitis C drugs fell in the first quarter. Above, the company’s headquarters in Foster City, Calif. PHOTO: ASSOCIATED PRESS
Health-care stocks fell the most in the S&P 500 Friday as biotechnology shares posted big declines. The Nasdaq Biotechnology Index fell 2.6%, putting its yearly drop at 21%. Gilead Sciences, one of the index’s worst performers, fell $8.79, or 9.1%, to $88.21 after it said late Thursday that revenue from its hepatitis C drugs fell in the first quarter.
Amazon.com was a rare bright spot Friday, as its shares rose 57.59, or 9.6%, to 659.59, its highest close of the year, after it reported its most profitable quarter ever late Thursday.
The Stoxx Europe 600 declined 2.1%, following a weak session in Asia. It was up 1.2% for the month.
“The fundamental question dividing the market now is whether we’re rallying off the bottom, or if we are two-thirds of the way down with more losses to come,” said Neil Passmore, chief executive of Hannam and Partners.
Haven assets extended gains Friday. Gold for May delivery rose 1.9% to $1,289.20 an ounce. The yield on the 10-year Treasury note fell to 1.821% from 1.838% Thursday. Prices rise when yields drop.
In currencies, the dollar continued to fall against its developed and emerging-market peers Friday as soft economic data eroded expectations for a U.S. interest-rate increase in June.
The dollar fell 1.5% against Japan’s currency to ¥106.51 Friday, weighed down by disappointment over the Bank of Japan’s decision Thursday to leave its monetary policy unchanged. The buck lost 4.7% against the yen for the week, its biggest weekly decline since October 2008.
The euro rose 0.9% to $1.1450, its highest against the dollar this year. The euro was bolstered Friday after data showed eurozone growth picked up in the first quarter.
