NEW YORK, June 15 The U.S. technology sector
fell on Thursday, pulled down by heavyweights including Apple
Inc and Alphabet Inc after bearish analyst
research gave investors a reason to take profits on the stock
market's recent champion sector.
The tech-heavy Nasdaq composite index fell 1.4
percent while The S&P 500 information technology index
was down 1.7 percent.
Google's parent Alphabet fell 2.7 percent, making it the
second-biggest percentage loser in the S&P technology sector
after Canaccord Genuity downgraded its rating of the stock to
"hold," from "buy."
The top percentage losers in the technology index were
Advanced Micro Devices, down 4.6 percent, and Lam
Research, down 2.97 percent.
The downgrade triggered a broader tech selloff, according to
Kim Forrest, senior equity research analyst at Fort Pitt Capital
Group in Pittsburgh.
Also, Barclays analyst Mark Moskowitz wrote that Apple is
near the peak valuation levels in its iPhone 6 cycle which
"could mean a bumpy ride lower" if the prospects for a mega
sales cycle diminish for its next smartphone. Apple shares fell
1.9 percent after the report.
“I think it’s a perfectly normal backing off. Tech has done
really well. All of sudden everyone wakes up and says, ‘Holy
cow, maybe we’re getting ahead of ourselves,’ and backs off a
little bit," said Brad McMillan, Chief Investment Officer for
Commonwealth Financial in Waltham, Massachusetts.
“I don’t think this is going to be sustained, simply because
if you look at the aggregate valuations … tech is not really any
more expensive than the market as a whole. Arguably, you are
getting a lot more growth at a pretty reasonable price. And that
is what has driven the performance so far, but the reality is
that is still the case.”
The selloff came a day after the U.S. Federal Reserve hiked
interest rates, as expected, and Fed Chair Janet Yellen said the
central bank could start selling bonds on its balance sheet
While the tech sector has fallen more than 4 percent since
last Thursday, it is still up around 17 percent year-to-date,
double the roughly 8-percent rise for the S&P 500. That
makes technology vulnerable to a pullback, said Tim Ghriskey,
chief investment officer of Solaris Asset Management in New
York, who saw no fundamental reason for the move.
"Any type of concern in the market, any reason to raise cash
levels, very likely these are the first stocks to go to because
of the valuation ... because they've become so dominant in
portfolios," said Ghriskey who said the selloff is a short-term
(Additional reporting by Lewis Krauskopf and Rodrigo Campos in
New York, Noel Randewich in San Francisco; Editing by Nick