Nasdaq posts its worst week of the year as tech stocks tank

Stocks closed sharply mixed Friday amid pressure from this year’s best-performing sector: technology.

The Nasdaq hit a record high at the open before closing 1.8 percent lower. Shares of Apple, Facebook, Amazon, Netflix and Google parent Alphabet all fell more than 3 percent.

The Dow added 89 points even as the S&P 500 dropped 0.08 percent, with information technology leading decliners. To be sure, tech has had a stellar year, rising about 20 percent in the period to lead all sectors.

“There’s a rotation from tech into different sectors,” said Dave Lutz, the head of ETF trading at JonesTrading, noting financials and energy, two of this year’s laggards, are outperforming Friday.

Lutz also pointed out that Nvidia had risen more than 5 percent earlier in the session before turning sharply lower. “That could be a signal that some traders are looking into.”

Financials received a boost from higher bank stocks, as the SPDR S&P Bank ETF (KBE) advanced 2.9 percent. The ETF was also on track for its best week of the year. Energy, meanwhile, advanced more than 2 percent to lead advancers.

Stocks hit record intraday highs earlier in the session as traders shook off a widely unexpected result to the general election in the United Kingdom.

Prime Minster Theresa May’s Conservative party lost its parliamentary majority in the process, coming up with 318 of 650 seats. Conservatives held a 17-seat majority before the contest. Some pollsters expected May’s party to retain the majority while others expected them to build on it. That said, no other party came out with a clear majority.

“Investors have been pretty bullish all year,” said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners. “All of the fundamentals are there for the market to go higher, but from time to time we become concerned with political uncertainty.”

The results sent the British pound spiraling lower to its weakest level since April 18 against the dollar. As of 1:50 p.m. in New York, sterling traded off those lows but was still down 1.7 percent at $1.273.

European equities seemingly shrugged off the result, however. The FTSE 100 rose 1.04 percent, while the German Dax advanced 0.8 percent. The pan-European Stoxx 600 index gained 0.32 percent.

“The muted response from financial markets so far reflects their sense of déjà vu. After all, in the past 12 months they have also had to absorb the shocks of the EU referendum result and President Trump’s election,” said Lucy O’Carroll, chief economist at Aberdeen Asset Management.

“That said, we could see a fair amount of volatility in the coming days and weeks unless Westminster’s response to this surprise result is remarkably smooth, which is unlikely. History tells us that hung parliaments are not durable, let alone with Brexit looming large,” O’Carroll said.

Traders also remained undeterred by former FBI Director James Comey’s testimony on Thursday, which some saw as lacking a “smoking gun” that could derail Donald Trump’s presidency.

Cornerstone’s Zaccarelli said that, while the testimony was “very unflattering” to Trump, it is unlikely to lead to an impeachment.

Fred Imbert

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