(Reuters) – A selloff in technology stocks dragged on the S&P 500 and Nasdaq on Wednesday, with investors also cautious about brewing U.S.-China tensions at a time when policymakers are attempting to revive the global economy from a coronavirus-driven slump.
Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid
Index heavyweights Amazon.com (AMZN.O), Microsoft Corp (MSFT.O) and Facebook Inc (FB.O), which have led a recent rally, were down more than 2%, while healthcare .SPXHC and technology .SPLRCT – outperformers in the coronavirus-led market slump – were among the S&P 500 sectors in the red.
Five of the 11 major S&P sectors were higher, with financials .SPSY leading gains. The bank index .SPSY jumped 4.4% but was still down more than 20% this year.
“The core theme is a rotation out of the high flying tech stocks and a move into laggard sectors which have underperformed, like banks,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.
“In the last couple of days, the reopening and the recovery have started to feel real for people and that goes a long way for confidence, both at the consumer level and in market sentiment as well.”
The easing of lockdowns, optimism about an eventual COVID-19 vaccine and massive U.S. stimulus have powered a recent stock market rally, helping the S&P 500 .SPX end on Tuesday at its highest level since early March and just short of the psychological level of 3,000 points.
However, Sino-U.S. worries have kept a lid on further gains. President Donald Trump said on Tuesday that Washington would announce its response to China’s planned national security legislation on Hong Kong before the end of the week.
At 11:27 a.m. ET, the Dow Jones Industrial Average .DJI was up 167.18 points, or 0.67%, at 25,162.29. The S&P 500 .SPX was down 2.45 points, or 0.08%, at 2,989.32 and the Nasdaq Composite .IXIC was down 116.58 points, or 1.25%, at 9,223.64.
Facebook Inc (FB.O) and Twitter Inc (TWTR.N) slipped 3.2% and 4.7%, respectively, after Trump threatened to shutter social media companies a day after Twitter prompted readers to fact check his tweets.
Investor attention will now turn to the U.S. Federal Reserve’s Beige Book of economic condition scheduled for release at 2 p.m. ET (1800 GMT).
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and matched them on the Nasdaq.
The S&P index recorded fourth new 52-week highs and no new lows, while the Nasdaq recorded 28 new highs and seven new lows.
Reporting by Medha Singh and Susan Mathew in Bengaluru; Editing by Arun Koyyur and Anil D’Silva