U.S. equities fell on Thursday as technology’s latest drop washed out strong gains from the big banks.
The Dow Jones industrial average fell more than 100 points with Apple contributing the most losses. The S&P 500 pulled back 0.8 percent, with information technology sliding nearly 2 percent. The Nasdaq composite lagged, falling 1.7 percent.
“The main driver in the market right now continues to be this low-growth economic environment as investors search for companies with strong earnings growth,” said Michael Arone, chief investment strategist at State Street Global Advisors. “That’s why you’re seeing these mixed feelings within technology.”
Tech has been the best-performing sector for most of 2017, rising more than 15 percent in the period. But over the past month it has dropped nearly 2 percent.
Shares of Facebook, Amazon, Netflix, Apple and Google-parent Alphabet all dropped more than 1.5 percent. Chip stocks also fell, with Nvidia and Advanced Micro Devices trading about 4 percent lower.
“This is really just a reversion to the mean,” said Tom Martin, senior portfolio manager at Globalt. “We think once the sector comes back from its high levels, it will be a sort of buy-the-dip dynamic.”
The drop in tech negated gains from the big banks, which followed the Federal Reserve not objecting to the capital repurchase programs from the banks they examined.
Elsewhere, yields continued to climb higher on Thursday, with the benchmark 10-year note yield trading near 2.28 percent; it started the week around 2.15 percent.
“The bond market had very low expectations for higher interest rates this year,” State Street’s Arone, noting the market doubted central banks would be able to tighten monetary policy as much as they had hoped. “Now, with Draghi’s comments, they’re re-evaluating those possibilities.”
Earlier this week, European Central Bank President Mario Draghi said: “The threat of deflation is gone and reflationary forces are at play,” sending European yields higher and dragging their U.S. counterparts with them.
The ECB tried to walk back those comments later in the week, but the sell-off in the U.S. and European bond markets did not abate.
In economic news, the U.S. economy grew at an annualized rate of 1.4 percent in the first quarter, according to the Commerce Department’s final first-quarter GDP read.
Weekly jobless claims, meanwhile, came in at 244,000 for last week, slightly above the expected 240,000.