A broad sell-off of technology stocks pushed all three major U.S. stock indexes lower on Monday, with the Nasdaq Composite posting its third consecutive loss of more than 1 per cent for the first time in three years just days after hitting a record high.
Based on the latest available data, the Dow Jones Industrial Average fell 144.23 points, or 0.57 per cent, to 25,306.83, the S&P 500 lost 16.21 points, or 0.58 per cent, to 2,802.61 and the Nasdaq Composite dropped 107.42 points, or 1.39 per cent, to 7,630.00
The U.S. dollar slipped against the euro on Monday ahead of several central bank monetary policy meetings this week, and a gauge of global equity markets fell, pulled down by a slide in U.S. technology heavyweights.
Most major currencies stuck to narrow trading ranges ahead of central bank decisions. The Bank of Japan ends a two-day meeting on Tuesday, the U.S. Federal Reserve concludes its policy meeting on Wednesday, and the Bank of England is expected to raise interest rates on Thursday.
In Toronto, the S&P/TSX composite index closed down 0.3 per cent, or 48.48 points, to 16,345.47 despite a 0.6-per-cent rise in energy stocks.
Information technology stocks fell 3.7 per cent as Shopify Inc. dipped 8.4 per cent ahead of the release of its quarterly results.
Materials stocks finished down 0.9 per cent with Canfor Corp. losing 5.6 per cent and West Fraser Timber Co Ltd. dipping 3.6 per cent.
Shares in Europe fell, led by a 2.9-per-cent decline in software maker SAP SE and a 2.8-per-cent drop in French industrial gases company Air Liquide. The FTSEurofirst 300 index of leading European shares closed down 0.26 per cent.
MSCI’s all-country world stock index fell 0.25 per cent on weakness in the so-called FAANG group: Facebook , Amazon.com, Apple, Netflix and Google parent Alphabet. Microsoft also was a big decliner.
Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee, said earnings reports from Facebook, Amazon and Netflix suggested the FAANG stocks had reached a saturation point.
Industrials, energy and materials led gainers on Wall Street, with Caterpillar Inc raising its full-year outlook after second-quarter earnings nearly doubled and beat expectations, helped by robust global demand for its equipment.
A revival in global growth may lift stocks even as technology shares cease to lead the market higher, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“You’re seeing a change in leadership in the market and that’s the underlying story here. Energy, financials, materials and industrials are the early leaders,” Arone said.
The S&P telecommunications services index rose 2 per cent and the S&P energy sector jumped 0.8 per cent as oil prices gained, with investors remaining cautious over the supply outlook and a potential hit to global output due to U.S. sanctions on Iran.
U.S. crude rose $1.44 to settle at $70.13 a barrel while Brent settled up 68 cents at $74.97.
The dollar slipped the most against the euro, with the common currency 0.45 percent higher as it recovered from its weakest weekly performance against the greenback in six weeks. The euro tumbled last week after the European Central Bank reaffirmed that rates would stay low through next year’s summer.
Analysts said the euro rebounded largely because traders felt it had been oversold last week.
The dollar index fell 0.38 per cent, while the Japanese yen strengthened 0.05 per cent versus the greenback at 110.98 per dollar. The euro rose to $1.1709.
Euro zone government bond yields rose after a strong Italian auction boosted demand for Italian debt at the expense of higher-rated markets in the bloc.
Expectations for the upcoming Bank of Japan meeting also pressured yields, analysts said, along with German and Spanish inflation data that remained slightly above the ECB’s price stability target in July.
Germany’s 10-year government bond yield, the benchmark for the euro zone, rose more than 4 basis points to a six-week high of 0.46 percent.
Yields on U.S. Treasury bonds rose, with the benchmark 10-year at a six-week high, as investors sold U.S. government bonds on growing speculation that the BOJ may adjust its ultra-loose monetary policy at its meeting.
U.S. benchmark 10-year notes were down 3/32 in price to yield 2.9728 per cent.
Gold steadied ahead of this week’s Fed meeting, which could give clues about the outlook for U.S. interest rates and the dollar, key factors for precious metals prices.
U.S. gold futures for August delivery settled down $1.70 at $1,221.30 per ounce.
Reuters