A pullback in tech shares weighed on stock indexes Wednesday, a sign investors were taking a breather after a multiweek rally that lifted the S&P 500 to its highest level in more than a year.
All three major indexes fell for the third straight session on Wednesday, with the S&P 500 slipping 0.5% and the tech-heavy Nasdaq Composite dropping 1.2%. The Dow Jones Industrial Average gave up 0.3%, or about 102 points.
Investor enthusiasm about artificial intelligence has boosted shares in megacap technology companies in recent weeks, helping power indexes higher. But those tech companies were among the worst performers on Wednesday.
Microsoft,
Alphabet
and
Meta Platforms
fell between 0.9% and 2.1%. Chip makers also dropped, with
Nvidia
losing 1.7% and Advanced Micro Devices sliding 5.7%.
Despite the declines, investors and analysts generally remained calm, arguing that tech stocks in particular were due for some consolidation after their outsize recent gains.
“I think it’s really just technicals at this point” rather than any change in business or economic fundamentals, said
Josh Emanuel,
chief investment officer at Wilshire “You’ve seen tremendous outperformance of technology and growth-related stocks” relative to stocks more closely linked to economic growth, he added.
Indicating the narrowness of Wednesday’s declines, six out of 11 S&P 500 sectors ended up higher on the day. Health insurers were a particular bright spot, with
UnitedHealth Group
rising 1.6% following its declines last week when company executives warned about increasing demand for elective procedures.
Shares of Facebook parent Meta Platforms headed south on Wednesday.
Photo: john g mabanglo/Shutterstock
The disparate stock market moves came as Federal Reserve Chair
Jerome Powell
delivered testimony before a congressional committee, reiterating that the central bank remained focused on bringing inflation back to its 2% target, with one or two more rate increases likely even after officials left rates unchanged at their most recent meeting.
Having climbed earlier in the day following hotter-than-expected U.K. inflation data, yields on U.S. Treasurys largely held gains as Powell spoke. But they later fell back to former levels after there was strong demand for an afternoon auction of 20-year Treasury bonds,
At the end of the session, the yield on the 10-year Treasury note stood at 3.722%, according to Tradeweb, compared with 3.726% Tuesday.
Interest-rate futures were also little changed from a day earlier. Investors believe there is a roughly 75% chance that the Fed will raise its benchmark federal-funds rate by 0.25 percentage point to between 5.25% and 5.5% at its meeting next month, according to CME Group data.
Elsewhere in markets, bitcoin rallied to more than $30,000 for the first time since April, according to CoinDesk. Analysts said the cryptocurrency was bolstered by supportive recent moves by traditional financial firms such as
BlackRock,
which has filed paperwork with the Securities and Exchange Commission for a spot bitcoin exchange-traded fund.
On the other end of the spectrum, soybean oil prices slid about 7% after U.S. regulators announced new biofuel blending mandates that fell short of the levels farmers and fuel makers wanted. The losses eroded earlier gains this month that were fueled by factors such as dry weather in the Midwest.
Overseas, Hong Kong’s Hang Seng index fell roughly 2% and the Shanghai Composite index dropped 1.3%. That extended a rough stretch for Chinese stocks that have been under pressure amid uncertainty regarding economic stimulus policies out of Beijing.
— Patricia Kowsmann, Bob Henderson and Caitlin McCabe contributed to this article.